There is great concern about China’s real-estate and infrastructure bubbles. But these
are just short-term challenges that China may be able to spend its way
out of. The real threat to China’s economy is bigger and longer term:
its manufacturing bubble. By offering subsidies, cheap labor, and lax regulations and rigging its
currency, China was able to seduce American companies to relocate their
manufacturing operations there. Millions of American jobs moved to China,
and manufacturing became the underpinning of China’s growth and
prosperity. But rising labor costs, concerns over government-sponsored I.P.
theft, and production time lags are already causing companies such as Dow
Chemicals, Caterpillar, GE, and Ford to start moving some manufacturing
back to the U.S. from China. Google recently announced that its Nexus Q
streaming media player would be made in the U.S., and this put pressure on
Apple to start following suit.
But rising costs and political pressure aren’t what’s going to rapidly change the
equation. The disruption will come from a set of technologies that are
advancing at exponential rates and converging.
These technologies include robotics, artificial intelligence (AI), 3D printing,
and nanotechnology....
