China is changing, and the world is changing with it. Simple math makes the case. Over the past 25 years, China’s economy has doubled, doubled again—and then doubled again. No large economy in the history of the world has grown as quickly, not even that of the United States or Japan. Chinese younger than 20 years old have seen their families’ incomes grow fourfold over their short lifetimes, infusing the nation with a dynamic, possibly combustible, mix of hope, pride and, for those left out of the miracle, desperation. As with all big countries, China must be understood in terms of the crosscurrents that work their way both inside and outside its borders, and, inevitably, often contradict one another. Here are 11 cultural, economic and ideological currents in China that are changing the Middle Kingdom and our world forever.

One: The largest migration in human history

This is the one trend informing all others. Within a generation, up to 300 million Chinese will have picked themselves up off the farm or walked out of backwater rural villages and made their way into China’s new urbanized industrial future. China calls its domestic migrants the “floating population,” and the largest concentration of them is found in the urban areas in the east, where 150 million people have newly arrived in cities looking for work. Together they make up a workforce about the size of the industrial labor force of the U.S. and the European Union combined.

Two: China's cities are booming

China has nearly 200 cities with more than 1 million people. That compares to nine in the U.S. At the rate the internal migration is proceeding, the country must add an urban agglomeration equal in size to Houston or Philadelphia every month. Shanghai, which included migrants in its population count in 2003, added 4 million people to its official rolls last year. The city estimates that an astounding 97 percent of new residents have found jobs. Many of them work in factories and restaurants, but most work building the city where, over the past six years, 5,000 buildings of more than 15 stories have gone up.

Three: China is newly hungry for natural resources

In 2003, China surpassed Japan and became the world’s second-largest consumer of petroleum products, including oil. The U.S. Energy Information Administration calculates that since 1999, China alone is behind 40 percent of the increased energy demand worldwide and is a significant factor in rising energy prices. That is not hard to understand, given China’s economic growth and urbanization. Beyond petroleum, China’s new appetites are felt in the markets for steel, copper, cement, agricultural products and nearly any other commodity with a global price. Or rather a climbing global price, which lately pretty much means the same thing.

Four: China is shopping the world for resources

As a result of its growing demand at home, China’s big state-run resource companies are striking deals with regimes around the world, an effort aimed at securing supplies of essential raw materials and agricultural products in the future. The Chinese have bid on big mining firms in Canada, struck deals with problematic regimes such as Burma and Sudan, and forged long-term agreements with Brazil and other Latin American governments which challenge U.S. influence in the Western Hemisphere. This long-term planning pits the resources of the Chinese treasury against the abilities of private firms in the U.S. and elsewhere to raise money from private capital markets, which tend to be more focused on the short term.

Five: China and the U.S. are financially codependent

China’s success as an exporting country owes much to its currency regime, which for years has pegged the exchange rate for the nation’s money, the yuan, to the value of the U.S. dollar. That has kept Chinese goods more affordable for foreign buyers than they might otherwise have been. It also has allowed the Chinese central bank to accumulate vast reserves of dollars and dollar-denominated bonds—$600 billion and counting. The result is that the Chinese have become major lenders to the U.S. government, and indirectly to U.S. businesses and consumers. Massive Chinese lending also pushes interest rates down worldwide and helps Americans buy more Chinese goods on credit. The result is a financial system that balances the practices of both countries precariously against each other. It also gives China economic and political clout in dealing with the U.S. that it formerly lacked. If China were to decouple the value of its currency from the dollar, American goods may soon be more competitive in China and the yawning U.S. trade deficit with China may begin to shrink. That is the hope of U.S. manufacturers. Currency markets, however, are notoriously unpredictable, and the actual result of a new currency regime is uncertain.

Six: China’s integration into the world economy feeds nationalism at home

For most of human history, China was the richest nation in the world. The country’s recent growth spurt is widely regarded as a correction to the aberrant setbacks and humiliations the Chinese suffered in the 19th and 20th centuries. Today, the country is full of a sense of destiny. This feeds much of the positive energy propelling China forward and makes it one of the most exciting places in the world to be. It also feeds the darker impulses of Chinese nationalism. In 2005, the U.S., Japan, Taiwan and Australia all have been the objects of blunt nationalistic lashings by China’s press, which almost always reflects government interests. Violent protests against Japan in the past year show an even more assertive and dangerous nationalist current.

Seven: China is a growing technological powerhouse

Chinese universities, where nearly 40 percent of all students are in engineering, graduate four times as many engineers a year as American universities do. China has become a center of world-class research and development. Local and foreign firms can hire Chinese scientists and engineers for one-sixth to one-tenth the cost of comparable talent in the U.S., Europe or Japan. Research centers run by the world’s leading technology companies are now commonplace in China. In its homegrown centers, China has made significant progress in biotech, robotics and supercomputing.

Eight: China speaks the world’s language

There are more students of English as a second language in China than there are native speakers of English in the U.S. and Great Britain combined—about 300 million. Compare that to the number of Americans learning to speak Chinese: about 50,000.

Nine: As China grows richer, its rural poor feel pinched

Because of the reintroduction of capitalist-style markets to China, the country has lifted 400 million people out of the lowest depths of poverty, more than any regime in history. Another result is that China has a growing wealth gap. The divide between China’s well-to-do and its poor is one of the two worst in the world, challenged only by Zimbabwe. Rural areas, where hundreds of millions of people still scrape a subsistence living from the land, are the poorest. Their average incomes are a small fraction of those in the eastern cities. Protests among the poor are rising. In 2003, there were nearly 60,000 protests in the countryside. Marches have involved tens of thousands of people upset over wages, industrial pollution or official corruption.

Ten: China will remain the world’s low-cost manufacturing center

China’s economy may well surpass the U.S. economy’s size within 30 years. Nevertheless, it will likely remain the world’s preferred site for low-cost manufacturing. In the modern era, the world’s largest economy has never been a center for the world’s lowest-cost labor. China will be a dominant force at both the low end and the high end of manufacturing. That’s a first, and something the U.S. and the world have no previous experience with on which to base a competitive strategy. Expect to see even more of the ubiquitous “Made in China” labels as China now is on track to be the world’s leading manufacturing country by 2012.

Eleven: The world is betting on a bright future for China

Since 1978, foreign direct investment in China has provided $400 billion to new Chinese firms. Foreign investment distinguishes China’s development from that of other once fast-growing Asian economies such as Korea and Japan, whose development was financed largely from within their own borders. Unlike those other economies, China’s is far less planned and far more diverse. Japan is big in consumer electronics and automobiles because of strong industrial policies that favored those industries. China is growing stronger in nearly every industry because of the diversity of investment and opportunity. Thousands of firms in China now produce the vast majority of Christmas ornaments in the world. Ironically, the Chinese don’t even celebrate Christmas; most have never even heard of Santa Claus.

A China Reading List

Author Ted Fishman spent several years in China, observing Chinese life and researching the trends that are turning China into a superpower both economically and politically. His new book, China, Inc.: How the Rise of the Next Superpower Challenges America and the World (Scribner, February 2005), landed on the best-seller list almost immediately.

Check out one of the following books for an interesting perspective on Chinese culture, geography and more:

• Tim Clissold’s Mr. China: A Memoir offers a fascinating story of a British businessman’s journey through the dreamland of Chinese (missed) opportunities.
• For a driving tour through China and 115 other countries, check out Jim Rogers’ engaging and insightful book Adventure Capitalist: The Ultimate Road Trip. Rogers calls China the “country of the future.”
• Fiction fans might enjoy the wonderfully engaging Inspector Chen Cao mystery novels by Qiu Xiaolong, set in contemporary Shanghai. Titles include Death of a Red Heroine and A Loyal Character Dancer. Qiu Xiaolong currently teaches at Washington University in St. Louis.

The World Is Watching

With just over 1,000 days left until opening ceremonies, preparations in Beijing are well under way for the 2008 Summer Olympic Games. China is preparing for what will likely be an impressive debut on the world stage. Beijing beat out Paris, Osaka, Toronto and Istanbul to serve as the host city for the 2008 event.

Already eight of the 11 new venues are under construction. And other construction projects are ahead of schedule. So far the total bill is estimated at around $40 billion—up from the original projection of $37 billion. Most of the investment will be in improvements to the Chinese capital’s power grid and transportation system, including new roads and 93 miles of new subways and railways. In addition to new venues, the Olympic Village and retail outlets, a massive urban face-lift, environmental cleanup and improved security measures are planned.

Bidding also has begun for the job of directing the elaborate opening ceremony. Renowned Chinese film director Zhang Yimou and Hollywood director Steven Spielberg have both tossed their hats into the Olympic ring for the honor.