 I'm Salvatore Bobonis and today's lecture is the New Economic Geography, China in the Millennial World System. The globalization era that began in the 1990s seems to have played itself out. After decades of rapid rising flows of trade and later foreign direct investment, these seem to have leveled off since the global financial crisis. In 1970 at the left side of this graph and 2008, the global financial crisis, global levels of trade as a percent of global GDP roughly doubled from less than 30% of global GDP all the way up to 60%. There was a similar, though much more volatile rise in levels of foreign direct investment graphed on the right axis as a percent of global GDP. The period of most rapid globalization ran for about 17 years, from 1991 to 2008. Yet since 2008, both series, trade and investment, have been stagnant or falling. Now of course there was the very sharp decline of 2009 with the global financial crisis, but even though both trade and investment bounced back up from that decline, they've been stagnant or falling as a percent of global GDP ever since. What we're left with is a global economy of about 75 trillion US dollars in GDP that instead of being evenly spread around the world has actually become highly concentrated in a few narrow geographical zones of the global economy. First North America with 29% of global GDP, second Western Europe with 24% of global GDP, and finally East Asia with 23% of global GDP. The entire rest of the world, South America, Africa, the Middle East, the former Soviet Union, South Asia including India, Southeast Asia, Australia, that entire remainder of world is less than 25% of global GDP. What's more, if you take just the Brits countries, Brazil, Russia, India, and South Africa, forget about China for a minute, think of the four large developing countries that are not integrated into global supply chains, but are instead cut off from the global economy. These four countries together, despite the fact that with China they were considered the leading economies of the globalization era, in fact, they're way down at around 7% of global GDP. China is rather larger and carries the Brits grouping up with it, but China is very different from the other large developing countries in that China is closely integrated into an East Asian production network, whereas the rest of the world's global south is not really connected into this larger global economy. In fact, if we zero in on each of these leading zones of the global economy, first North America, slightly over 50% of total trade in North America is actually intra-regional trade. It's trade among the United States, Canada, and Mexico, the NAFTA countries. Now, NAFTA may or may not be renegotiated by the Trump administration, but the fact is that North America is a single, very closely integrated production network. The supply chains of North America really are mostly turned in within North America, and that becomes even more clear if you were to disaggregate the United States. After all, 87% of the North American economy is in one country, the United States of America. Imagine if the United States were disaggregated, so that just like in Europe we thought of trade between the East Coast and the West Coast as trade. But now it's not captured in international trade statistics. Imagine if it were, then we would find that the integration of the North American economy would be far more than 50% of all trade would be within the zone. The North American part of the global economy is in fact the best integrated, and I think the most closely integrated zone in terms of governance of the entire global economy. After all, the vast majority, 87% of the North American zone, is governed under a single set of laws with only minor state-by-state differences within the United States. Contrast that to Europe. In Europe, 69% of all trade is intra-European trade, that is European countries mainly trade with each other, but there's only weak political integration of the core of that zone. I mean the European Union is the main governing body of the economy in general in Europe. Even countries that are not members of the European Union have to follow European Union rules if they want to be integrated into the European economy. This is the big debate over Brexit when the UK leaves the European Union to what extent will it still be governed by European Union rules simply because it's part of Europe and it wants to export to Europe, but the European Union's coverage of the European economy will fall down to 78% once Britain does leave. It'll still be the behemoth of Europe, but it will no longer be the only game in town in Europe. What's more, the European Union's level of political integration is much weaker than that of the United States. Obviously the United States is a single country even though it has 50 constituent states, virtually all economic governance is conducted at the federal level, whereas the European Union still contains 28 countries that each have their own economic policies that can be very different from each other. In East Asia there's similarly a high degree of intra-regional trade. Most of East Asia trades with other countries within East Asia, and just like in the North American case, if you were to unpack China, China is the 800 pound gorilla of East Asia, if you were to unpack China into separate regional economies and include trade among Chinese regions as part of intra-regional trade, you would find that East Asia is also very highly integrated, just like Europe is. But here, although there is full political integration of a two-thirds part of the zone, two-thirds of the East Asian economy is in China, so it's in one country, that country has very poor economic governance. In East Asia we see only a smaller part of the zone covered by one set of rules, the Chinese part of East Asia, and those rules are not anywhere near as robust as the governance mechanisms in place in the United States or even in the European Union. So what we have here are three zones of the world economy that trade mainly within themselves, and we all use the word globalization to mean some kind of world is flat connection of everybody with everybody else in the world, but from an economic standpoint, we haven't really seen globalization. We've seen a regionalization of the global economy into three distinct economic regions, and everywhere else that remaining 23 or 24 percent of the global economy is very poorly integrated with these larger zones, and they're not integrated with each other. So Brazilian trade is not oriented towards the other countries of South America, it's oriented towards Europe, China, and United States. The same is true of trade in Australia or trade in India or trade in South Africa. These are all countries that mainly trade with the three major economic zones of the world. They are not countries that mainly trade with their neighbors, and that's really distinctive. There are three integrated zones in the world, and then there are another 120 countries or more that are poorly connected to those three leading zones. What's more, these three leading zones are not created equal. There's a very strong hierarchy, and if you think about it, we usually graph the world with Europe at the center, North America off to the west and China off to the east, but if you start looking at travel times by sea, from North America to Europe is about 10 days in a container ship. From Japan or China to California is about 15 days in a container ship, but from China and East Asia to Europe, the so-called One Belt, One Road routes across Eurasia and by sea between China and Europe are about 30 days by container ship. So in economic geography terms, it's wrong to say that America is in the west and China is in the east. In fact, in economic geography terms, North America is at the center, Europe is in the east, and Asia is in the far west, far off the west coast of California, and in fact, integrated production networks really confirm that. The Asian production networks, the most famous products coming out of Asia, the electronics, the mobile phones, even the software, is all very closely integrated into the California and the American economy, not closely integrated into the European economy. From an economic standpoint, when you're in China, you're in the far western outpost of America, you're not in the far eastern outpost of Germany. One Belt, One Road as a policy in China is meant to produce better economic integration in Eurasia between China and Western Europe, better integration between these two secondary zones of the world economy. The problem is simple geography. These places look close on a map, but in economic terms, the distances are enormous because most freight is carried by sea. If you take that freight and build railroads and put it across land, it takes 20 days for trains to get from China to Western Europe. So even a train trip from China to Western Europe is slower than a sea journey from China to California. What's more, that train trip costs three times as much. So again, in terms of time and money, it is more distant to connect to China with Germany than it is to connect to China with California. Not only is North America at the center in terms of trade networks, North America is actually much richer than the other two zones of the world economy. Now it's difficult to compare different parts of the world economy because different regions are different sizes and we can't always make direct comparisons, but some very broad comparisons make this clear. For example, in North American terms, Germany, the leading economy of Western Europe, the economic driver of the eurozone and of the European Union, has the same GDP per capita, roughly speaking, as the US state of Alabama in the deep south. Japan is even poorer. Japan is at the level of Mississippi. Now it may be hard for you to think of Germany with its beautiful cities and its very high quality of life, or Japan with its amazing Shinkansen trains. It may be hard to think of those countries as being on a par with the US deep south, but once you start measuring things in statistical terms, instead of in traveler's terms or vague impressions when you visit some place, in statistical terms these equations are actually very well measured. If you want to grasp that in some intuitive sense, think that while in Germany they have lots of very modern infrastructure and fantastic trains and beautiful cities, well, but in Alabama many people have a very large house with two big pickup trucks with six-cylinder engines that guzzle gas. I may not prefer the Alabama model to the German model, but that's just my own personal preference. People in Alabama can afford to have lots of house space, lots of land, lots of cars, lots of boats, and just because Alabama consumes different kinds of things in Germany, Mississippi certainly consumes different kinds of things from Japan, doesn't mean that the things consumed in Japan and Germany are actually worth more. Statistically speaking GDP per capita, the total amount produced divided by the total number of people in Germany is simply on a par with Alabama. In a way that makes sense because if you think about it, manufacturing in the United States fled Michigan and New York and moved to places like Alabama and Mississippi in the 1960s and 70s. Today the deep south, Alabama, Mississippi, Tennessee, is the manufacturing hub of the United States. What about Germany and Japan? These are economies that are very highly dependent on manufacturing exports. There's a reason why nobody manufactures in New York or Michigan anymore, and that's because New York and Michigan are too rich to support manufacturing industries. Well, Germany and Japan are not too rich to support manufacturing industries. In fact instead of seeing the existence of manufacturing as something that is somehow positive for an economy, a better way to see it is to think the richest places in the world are far too rich to bother manufacturing. That's why there's no manufacturing in Silicon Valley, there's no manufacturing in Sydney, Australia, there's no manufacturing in London. These places are just far too developed to have manufacturing. Japan and Germany are still far enough behind that it is economically possible to manufacture in those countries. In fact, if you start disaggregating the United States and viewing it as an economy of regions, think of California. California is a region that's similar in size and population to Japan. It's not quite as big as Japan and population, but they're in the same league. California could be its own country. Well, California if it were its own country would be twice as rich as Japan. That is the GDP per capita of the state of California is 200% of the GDP per capita of Japan. Now that takes a little bit of reorienting your mind to get around that really Japan is the Alabama of California. That is Japan is the poor manufacturing center for the rich sophisticated economy of California. And in the same way, Germany's GDP per capita is only about 100... I'm sorry, the northeastern United States GDP per capita is 70% higher than that of Germany. And that's not just because Germany includes its poor eastern zone or what else. In the northeastern U.S., the area running from Virginia to Maine again could be a country of its own. It's an area of 40 million people. It's a very large chunk of the global economy. And that northeastern United States running from Virginia to Maine has a GDP per capita that is 50% higher than Bavaria. And Bavaria is the richest state in Germany. So even comparing light for light, rich areas for rich areas, the northeastern U.S. is still 50% richer than the very richest state in Germany. So I think this helps contextualize just how far ahead North America is. And of course we can see it in many other ways as well. The end of globalization, there was a period of rapid change in the world from 1991 through 2008. Then we had the global financial crisis. And this graph shows market capitalization of stocks on stock exchanges around the world. Before the global financial crisis, Europe did not have quite the corporate wealth that the United States had. This is the European Union's corporate stock market capitalization, $4.8 trillion versus America's $5.2 trillion before the global financial crisis. Since the global financial crisis, the global world has taken shape. Not the globalizing world of 1991 to 2008, but the new configuration that we live in post financial crisis. In this world, more than 60% of the total market capitalization of global stock exchanges is concentrated in the United States. If you were to throw Canada in, you'd probably be up around 2 thirds of global stock market capitalization being in North America. We've seen this separation of North America from the rest of the world in corporate terms. And this is not just dominance. It's not just that US stock markets have continued to rise while European stock markets have been stagnant. It's also dynamism. Think for a minute, what are the top new economy companies in the world? If you think what are the top companies, you get all sorts of old dinosaurs like Saudi Aramco oil company or Sino-Pek in China, the oil company, or Exxon in the United States. You can think of these huge industrial and resource companies, but nobody thinks that companies like Sino-Pek and Saudi Aramco are the companies driving the future. If you try to think of the companies driving the future, they're overwhelmingly based in the United States. Here's a graphic that just illustrates this. These are the top market capitalization of companies in the world, not just the United States but in the world. If you go back 15 years ago, the only tech company that was in the top five was Microsoft and let's face it, Microsoft is not necessarily the most innovative tech company in the world. Yesterday in 2016, the five top companies in the world by market capitalization were Apple, Google, Microsoft, Amazon, Facebook, five US-based tech firms. This little infographic really says it all. It shows that the North American economy has become the dynamic center of the global economy around which the rest of the world revolves. This isn't necessarily because the United States is so magnificent, or Americans are so productive, or have all the good ideas. In fact, many of the good ideas that you find in America come from foreigners who moved to the United States to develop their ideas because it's the center of the global economy that they want to be part of. So from the BRICS countries, Brazil, Russia, India, China, South Africa, from Europe and from the global south in general, India, Sub-Saharan Africa, Latin America, people overwhelmingly talented entrepreneurial people overwhelmingly choose to move towards North America, not to Europe or East Asia, but to North America to develop their companies as a place to fully develop their skills. They also want to invest in the United States, and this is particularly facilitated by capital flight. When people get their money out of places like China and South Africa and India, it overwhelmingly goes to the United States. The only other country it goes to is the United Kingdom, and that's mainly a recipient of Russian capital flight. In fact, if you look at the top five countries for capital flight, for human flight, for immigration, of skilled migration, the countries where people want to send their children to go to school, that's the United States, and then the closely aligned countries of the Anglosphere, the United Kingdom, Canada, Australia, New Zealand. Rich Chinese are not sending their kids to go get educated in Germany or Japan. They're sending them to the Anglosphere and primarily to the United States, and that's what brings you images like this. This is one of my favorite internet memes. It's a Chinese graduate at Harvard Business School, a certain member of the global elite holding in the air the two most important symbols of his life on his graduation day, his patriotic flag, People's Republic of China, and the almighty dollar, the US $1 bill. And this says it all, that this person may be Chinese and may be very patriotically Chinese, but he's paid for a degree in the United States, he's developing his talents in the United States, and he's very likely to invest his money in the United States rather than leave his savings accumulating in China. He embodies, symbolizes certainly, the flows of people and capital from China and other parts of the world to the United States. So when we look at this map of the world, what we really see is one zone, North America, with the United States as its center, as by far the richest, by far the best politically integrated zone of the world economy, by far the zone where people from the rest of the world want to move, and also the zone at the center, meaning that the United States is closely connected to Western Europe and the United States is closely connected to East Asia, but Western Europe and East Asia are not closely connected to each other. Now the big question is, what does this mean for China? The only place in the world, the only place in this map that has the potential to disrupt these patterns is China. Well, China right now is 15% of global GDP, and then the rest of the bricks put together. So China is really like the, overwhelmingly the largest developing economy in the world, but it is embedded in the poorest and least well integrated of the world, three major economic regions. It's embedded in East Asia, not directly embedded in the North American economy. Thus as China moves up the value chain, it's primarily moving up the East Asian value chain, not up the global value chain, right? It has to conquer East Asia metaphorically, economically conquer East Asia, before it moves on to taking over in the larger world. And that's going to be a problem, because China with no disrespect meant to anyone in the country is governed by a highly corrupt, I think everybody knows that the government in China is highly corrupt, party state in which the Communist Party, a single political party, fundamentally influences all aspects of economic planning and development. It limits personal freedom, but at it, more importantly from the standpoint of economic development, it limits economic freedoms. The party for political considerations tells state-owned banks where they should invest. Now they may do a good job of that. They've certainly done a better job of that than similar governing parties in other developing countries in the world. But I don't think anyone believes that if you want to have a rich, highly developed economy, the way to do it is to have a political party decide where investment will go and what companies will prosper rather than having a free market make those decisions. Also, the lack of political accountability in China results in problems like its enormous levels of air pollution. China has been unable to solve these sorts of problems of public goods like clean water and clean air, in large part because it's impossible, well, it's not impossible, but government doesn't have to be responsive to its citizens. Government tries to keep unhappiness among its citizens down to an acceptable level, but China is not ultimately a country in which the government answers to the people. Instead, people live to serve the government and serve the country. And as a result, many of them simply leave. China has, you know, over the last 30 years sent 2.2 million students to go study in the rest of the world, only 1.2 million have returned. I mean, the top Chinese talent flees the country to work elsewhere because why should you work somewhere where you can't breathe the air when you can go work in Silicon Valley or in Sydney or London or Boston or somewhere else where you can have a clean and safe environment? In fact, the numbers of Chinese moving overseas is large and rapidly rising. And if you try to break down the streams through which Chinese families are moving overseas, and these are numbers of families, not numbers of individuals. These data in this graph show the number of people getting a bridgehead, getting some kind of visa, which then can be used to bring spouses, children, can be used to bring other people over with them. You see that these are indicative numbers. None of these numbers are available in hard exact counts. They're all available in roughly indicative numbers. And you see that they're concentrated in the Anglosphere. Canada and Australia are two of the main destinations for Chinese skilled migration, even though Canada and Australia are much smaller than the United States. They attract similar numbers of skilled migrant visas, just a little bit under the U.S. So if you put it all together, most years there's something around 100,000 relatively elite Chinese establishing bridgeheads in the outside world. But that is about to change. Since late 2014, Chinese citizens have been able to get a 10-year tourist visa to visit the United States. Prior to that, it was well known that Chinese women were pregnant, had a lot of trouble getting visas to travel to the United States, because the United States has juice-soli citizenship, meaning that any child born in the United States is automatically eligible to be a citizen of the United States. U.S. immigration officers often would deny a visa to a Chinese woman if she looked pregnant. Thus, before 2015, if a Chinese woman was pregnant and wanted to have the child in the U.S., she often had to immediately get in a plane, the minute she found out she was pregnant, but before she was actually showing the pregnancy. It created very difficult logistics. Women would have to try to get pregnant, reserve the pregnancy hospital in the U.S., and then the minute she knew she was pregnant, apply for a visa. Today, none of those games are necessary at all. Today, a Chinese woman can graduate from a university, still be single, get a 10-year U.S. tourist visa, wait around until she's 27, 28, 29 years old. The average age at first birth in China is now similar to that in developed countries, so around age 26, 27 years old. So she can wait until she's 27, 28 years old and married and then gets pregnant and then wait until the fifth or six months before pregnancy and then get on the plane and go to California to have the child because she already has the visa. As a result, the numbers of Chinese women going to the U.S. to give birth is in the process of rising. It's impossible to get data on this, but indicative data suggests that up until 2014 it was around 10,000 women a year and that in 2017 it might reach 80,000 women. And it might rise because women who just got their 10-year U.S. visas in 2015 and 2016 might not go to the U.S. to have children until 2020 or 2025 because the whole point is there's no rush for them to do it. Now, in the context of China with 1.4 billion people, this may not seem like a lot, but with 100,000 families a year, and this may rise to 150 or 200,000 families a year, establishing a connection in the U.S., there's the potential over the long term, over the course of the 21st century, literally for several million relatively rich, middle-class, talented, educated Chinese to emigrate from China to the U.S. And when they emigrate, they'll become, instead of Chinese, their children will become Chinese-Americans but American citizens who have assets back in China. In other words, it'll be just as if the Chinese economy was being run by foreign investors. Those foreign investors may have Chinese faces and Chinese names, but they will be U.S. citizens living in the United States. So where is China now and where is it likely to go over the course of the 21st century? I've been writing about this question for the last six or seven years. In fact, I had a cover article. There's me on the cover down there in Foreign Affairs Magazine in 2011. Is China's rise inevitable? A debate between me and Arvind Subramanian. Now, who am I? I'm a sociologist at the University of Sydney. Arvind Subramanian is the chief economist of India and had previously been an economist at the International Monetary Fund. So little me and a really very famous Arvind Subramanian. What I said in 2011 is that China will likely to continue growing faster than Western countries, though after 2020, its growth will have slowed down. Or by 2020, its growth will have slowed down and become much more volatile. And I said after 2020, the Chinese population will start to fall. Chinese growth won't average more than about 3%. China will simply become another middle-income country, roughly on a par with Russia and Brazil and Mexico. Subramanian thought that by 2030, the US will be declining. China will rising. There will be not even a multi-polar world. But by 2030, which mind you, is only 13 years away, there will be a unipolar world dominated by China. So Subramanian was just taking the current levels of GDP growth in China in 2010 when China was growing at 10.5%, 11% per year. And he said that this is going to continue. And by 2030, it's going to be a world centered around China with the United States, a second-tier country in a Chinese world. China's ascendancy is imminent. I find that a completely incredible assertion. And those of you listening to this can think for yourself. Do you really think that in 12 or 13 years, China won't just be a competitor to the US. But in 12 or 13 years, this entire picture I've drawn you, North America at the center, East Asia on the periphery, and China on the periphery of East Asia, will that have completely turned around with East Asia at the center and China at the center of East Asia? I think that knowledge is inconceivable in 13 years, but it's inconceivable at any time in the future, at least in the next few hundred years. And a big reason for that is population. We can all argue over economic statistics, but we can't argue very much about demographic statistics. Now, if you think China is going to grow to be just as rich as the US in per capita terms, well that's for an economist maybe to predict. What I can tell you is that China's population, which has always been the largest in the world, will soon be the second, the third, the fourth largest country in the world. In fact, by 2030, China, or by 2050, and certainly by 2100 by the end of the century, China is likely to be smaller, not just smaller than India. I mean, it's going to be smaller than India any day now, but it's going to be smaller than Nigeria. It might be smaller than Indonesia. There will be several countries larger than China. And that's because China's birth rate is, fertility rate is extremely low. The fertility rate in China, nobody knows exactly because it's a very political statistic. Most of us estimate that China's fertility rate is somewhere around 1.3, at most 1.4 children per woman. Now, obviously, replacement would be two children per woman, on average, and in fact, true replacement levels of fertility are slightly more than two children per woman for several technical reasons. So China has nowhere near replacement fertility, and as a result, China's population is going to drop dramatically over the course of the century. I'm sorry you can't really see the points on this, but this is today, 2017, and this is 2100. By 2100, China's population is projected to be under one billion people for the first time since the 20th century. That is the projection based on official fertility statistics. Official fertility statistics say that China's fertility is around 1.7 or 1.8 children per woman. The real fertility rate is actually, like I said, closer to 1.3, which would give you this kind of scenario of China dropping by half to have a population of somewhere around 700 million by the end of the century. Personally, I think that's much more likely, and it raises the prospect that the Anglo-Saxon countries might actually overtake China in population sometime early in the 21st century. Now, we're pretty confident about fertility and population growth in the U.S. and the other Anglo-Saxon countries because their populations are mature and stable and change very little over time. There's low growth in population due to basic pro-family policies, and there is a high level of in-migration. People want to move to the U.S. China has virtually no immigration, and as a result is unable to make up for the lost babies that occur due to low fertility. In short, China will, quote, get old before it gets rich. And I put that in quotes because it's become a well-rehearsed maxim of people saying that China has missed its demographic window. Now, I don't think China has missed the window. China grew enormously over the last 40 years. It's just that China started from such a low base that even though China made good use of its demographic dividend from lower fertility rates and having a productive population, there's simply nowhere further for it to go. In fact, China's population is aging rapidly. This is China's population profile in 2017 for men on the left and women on the right. And as you can see, China currently has a large population bulge in their late 40s and early 50s, and a large population of their children who are now in their mid-20s. So the two big population groups in China are a large group of people who are in their 50s and their children. Both of those groups, of course, are going to age over the next 30 or 40 years. So if we look at 2050, we'll see that the group that's currently now in their 20s are going to be in their 60s, nearing retirement, and the ensuing generations are going to be much, much lower than the generation of current Chinese students in their 20s. And this can only be reversed if China is the first country in the world that manages to boost fertility rates. In general, fertility rates, as countries develop, tend to go down. Maybe China will reverse that, but a two-child-child policy certainly won't do it. China would need to have lots of people having, you know, three, four, and five children to make up for those who choose to have zero or one child. And there are, first of all, that would be illegal that the two-child policy is not an unlimited child policy. And second, there are no signs that people want even two children. Never mind that people want three, four, or five children. So a lot of people said, look, South Korea went from being, you know, poor country to being developed. Why can't China, you know, why can't China just do what the other East Asian tiger economies have done? And there's some problems with that argument. First of all, South Korea is not as rich as you might think. It took South Korea 30 years in an economic miracle between 1960 and 1990 to go from being an incredibly poor country to having one-third of US GDP per capita. It took it another 20 years from 1990 to 2010 to nudge its way up from one-third to one-half. So China is still at the point where it's down at around a quarter or a fifth of US GDP per capita. Could it get up to one-third? Yes, I mean, I think that's doable. But once it gets up to one-third of US GDP per capita, China would start inching its way up. I mean, it would have to... It's very difficult to continue rapid economic growth once a country gets to a level that's, you know, one-third or one-half of that of a developed country. And, you know, Korea really shows that. If China caught up with South Korea, that would be an incredible accomplishment. But even if China caught up with South Korea, it would still only be about half as rich as the United States. And, of course, the other problem is that South Korea accomplished this by exporting its low-wage jobs to China. So a lot of the story of South Korea becoming a rich country was that South Korea once... South Korea went from nothing to one-third of US GDP by developing South Korea. But South Korea then started inching its way further up the value chain by moving low-cost production offshore to China. Japan has done the same thing. Taiwan has done the same thing. Hong Kong has done the same thing. They are continuing to move up the value chain by pushing low-cost production to China. Of course, the problem is China is 25 times the size of South Korea. It has nowhere to export its jobs to. As China gets rich, it exports its jobs further west in China. Well, that might be great for people in Shanghai and Guangzhou, but it's still part of the Chinese economy. China would need an entire continent of low-wage workers for China to move up the value chain. South Korea is at a higher place in the value chain because South Korea's low-wage workers are actually located in China. Where will China's low-wage workers be located? It's one thing to find a low-wage zone to support the 40 million people in South Korea. It's another challenge to find a low-wage zone to support the 1.4 billion people in China. Of course, China is perhaps unlikely even to reach South Korean levels of development because it lacks democratic accountability, rule of law, real functioning capitalist markets, etc. If we look at China in statistical terms, the Chinese rich coastal provinces, places like Beijing, Shanghai, the Yangtze River Delta, Guangzhou, Guangdong Province, and the Pro River Delta, these places have already reached South Korean levels of GDP or are coming very close to it. But as you go inland, GDP per capita falls dramatically. Western China, places like Sichuan Province and Chongqing Province are far lower. They're still at a level that's only one eighth or one sixth of South Korean levels of development. So even as coastal China does converge, if you were to look at the rich zones of East Asia, yes, you would have Japan and South Korea and Taiwan, but you'd also have Shanghai and Beijing and Guangzhou. But farther out west, there are the poor zones of China. And in fact, you can see this clearly when you look at where the fast growing parts of China, those parts of China that have become rich already are the areas where growth has slowed down to a crawl. So the richest part of China, Beijing, is also the slowest growing part of China. Same for Shanghai is the second slowest growing part of China. Then Guangdong Province is the third slowest. So as these individual provinces reach South Korean levels of development, their growth has slowed to a crawling level just like South Korea's level of growth. The rapid growth is only occurring in the very poor provinces farther to the west in China. In short, in today's new economic geography, the highest skilled people are not staying in places like Western China to help them develop and converge to California levels of growth. The world's most skilled people are instead moving themselves and their families to places like California, while places like Western China or Eastern Europe, for that matter, remain behind. And this is a story that you can read more about in my book, American Tiansha, the Chinese Money, American Power, and the End of History. My book encapsulates this argument, at least with regard to China, and shows how larger global forces are creating a system that leaves China as an economic periphery of the periphery. That is, it's in the second tier of the global economy in East Asia, and China is the low wage periphery of that second tier. And if you'd like to hear more about developments month by month, as I write more about these topics, please consider signing up for my global Asia newsletter. It's roughly once a month, and it is free. You can find a link on my website at salvatherbabonus.com. Thank you for listening, and please do consider signing up for the newsletter.