Your economic arguement of China's economy is flawed for a number of reasons both historical and theoretical. Southeast Asia was actually a manufacturing center well before China was. In fact, per capita incomes are still slightly higher in Malaysia and Thailand than they are in mainland China. You are under the mistaken impression that manufacturing industries in these countries can become competitive now when they were not decades ago. This is actually backwards as 20 years ago, modernization in China was just beginning and SE Asia was the primary competitor. The reason why I do not expect individual SE Asian states or African states to be very competitive (excepting in specialized areas) against China is because of one fundamental economic principal, economies of scale. Simply put, China's mass and own internal market gives it an (perhaps overwhelming) advantage in keeping costs down. It is not simply the price of labour that is attractive to economic investment but also overall efficiency. There are already a number of developing nations that have lower wages than China but whos infrastructure is subpar thus cannot remain competitive. Another reason why the China model cannot easily be emulated is because of it's simple size. You yourself made mention of it, but China's economy provides an advantage for Chinese business interests when negotiating for foreign investment. This manner of leverage can hardly be acheived by Vietnam let alone any of the myriad of developing African states. I for one cannot see Zimbabwe having the clout to coerce GM to invest in joint-companies and technology sharing. Perhaps I am being morbidly pessimistic, but I've come to view most of Africa as essentially a lost cause for the near and mid-term future. Also I've come to the conclusion that English language proficiency in aiding economic progress is largely exaggerated. Emperical observations suggests no consistant pattern of correlation and I suspect that the issue is irrelevant to modernization as long as the fundamentals of economic development exist.

Thought-provoking, Andres, though Jing has a point: Other Asian countries have been manufacturing centers for quite a while.

Say, China's been investing in Zimbabwe since Mugabe "created" so much unoccupied capital. Do you suppose those Zimbabwean shorts might actually be from a Chinese-owned factory?

Hmmm, yeah, some SE Asian countries did start industrializing before China and entering world markets before China, but that doesn't stop them from being competitors today, and I don't think it rises to being a fatal historical flaw in my argument.

As for Africa, while sometimes I too think it is a lost cause, it's simply not reasonable to believe that a failed state will always be a failed state. If that were the case then we should have given up on China a long time ago.

An English-language educational establishment does not guarantee in any way the economic success of a country, but having large numbers of English speakers will at least make it easier to connect with other international businesspeople for no other reason than because English is the accepted international business language. It's not key, but it doesn't hurt either.

Moving to your main point, I am unconvinced that size is all. If that were the case then China would have been the most developed country on earth since time immemorial. That's not the case.

While economy of scale is important, I don't think it alone determines the success of a nation. There must be other attributes, education, infrastructure (like you said), and a fair legal system, that give businesspeople confidence to invest in new factories. China increasingly has these attributes and that helps explain why it has managed to finally develop in the last thirty years.

However, there is no reason, in my mind, why other countries cannot also get those characteristics. In addition, while China, as a single country, will probably have an easier time building out infrastructure and writing a business-friendly legal regime, individual countries can work together to achieve the same goals.

The European Union is the most famous example of increasing economies of scale beyond national borders, but there are others. The maquiladora phenomenon on the US/Mexico border is one. The St Lawrence Seaway between the US and Canada is another.

In addition, there are increasing numbers of companies that have their manufacturing plants spread across many countries: they create their own economies of scale. Your example of GM is a good one: they build parts for their cars on practically every continent. Toyota car plants in America are another example. Japanese companies that have moved their plants to SE Asia are another example. In these situations, companies have looked at the various advantages to be garnered by working in different countries and adjusted their manufacturing strategies accordingly.

Just because China is big does not mean that these multinationals are putting all their plants in China. This is why I say that competitiveness between different countries is going to lead to some future investments to not go to China and thus affect China's economy. Being small is not a handicap, especially in an age where trade barriers between countries are getting lower and lower.

Simply, economies of scale are not dependent on national borders in an era of increasing international free trade, so I don't think my argument has an irreparable theoretical flaw. And this is without even talking about India, a country that shares a single sovereignty, like China, a population over a billion people, like China, and is making an effort to use capitalism and world trade to develop out of poverty, like China. If, as I believe, companies can be reasonably expected to invest in well-run smaller countries like they do in well-run larger countries, then this expectation should be more than met when comparing two well-run larger countries.

Whether China is competing against a smaller country or India, the result will be the same: competitiveness will put pressure on profits, thereby putting pressure on tax receipts and wage levels and making it more difficult for Beijing to meet the many needs of its population. And while that will not make the job of governing China impossible, Beijing's lack of democratic legitimacy will mean that it cannot afford to make any serious mistakes, a margin of error that a democracy does have.

Being small is not a handicap, especially in an age where trade barriers between countries are getting lower and lower.

Jing, I think you're right in many ways, but I feel you over-value China's economy of scale. If the system here were more efficient and "rational", for lack of a better word, it would be more important, but there are systemic issues which keep the large scale from being as important as it could be.

The lack of transparency (the tradition of jealously guarding information, to the point of blocking helpful information) is one of the biggest ones I can think of. I haven't worked it out eloquently, but I can give you a typical example:

One of my company's subs sells a specialized material (inside China), but it's a large market where normally supplies and prices would be efficiently handled, with clear alternatives available and known to all players. But since each of our corporate customers is a small fiefdom who won't divulge needs or plans, each sale is like reinventing the wheel.

It often takes several weeks and a few meetings to consummate a transaction, because all the factors in a deal have to be negotiated and haggled over, rather than operating as though we're in a liquid market. Emergencies come up because the customers won't tell us in advance what they might need, necessitating urgent air shipments of material from abroad. As a consequence, we have to build a 100% profit margin into our price because the deals are so convoluted and troublesome. The same deal in what I'll call a rational market (the US) would take 30 minutes, and can be done for a 10-20% markup because it uses so much less manpower, and less carrying cost.

Good roads, steady electricity, and a big market can't compensate for this kind of obstacle to business.

Then again, Vietnam may be even worse. That's one I don't know about, though I know the labor costs are lower there.