China: Competitive myths and realities

China's economy is admired and feared. Shoppers often conclude that" everything is made in China," and politicians like to rant about our trade deficit with China. But a closer look at some facts throws a different light on all of this. The trade deficit, for instance, is exaggerated by the way China records export data. And China's economy, while impressive and fast-growing, has weaknesses. The leading exporters are firms with significant foreign investment and ownership. Generally speaking, indigenous firms have not developed global brands, have not created or adapted technologies, spend almost nothing on R&D, and lack the skills to compete internationally. China may end up following a developmental path in which foreign partnerships are a key.[