China's Buying More Computers Than the U.S., and That's a Good Thing

Before we get too pessimistic about comparative economics, it’s worth remembering that this is all part of the plan to rebalance the world economy.

Chinese customers bought more personal computers than United States residents during the second quarter of this year, the first time that's ever happened. Since most of those computers are manufactured in China, isn’t it about time?

China represented 22 percent of the global PC market after 18.5 million PCs were shipped to customers there. The United States represented 21 percent of the market with 17.7 million units, according to a report from the International Data Corporation.

The shift won’t last the entire year, as the crummy U.S. economy contributed to a purchase slowdown and analysts expect holiday purchases to push China back into second.

But the general trend is inevitable—China’s population is nearly four times the United States', so there are a lot more customers, even if most aren’t as wealthy as Americans (yet)—and part and parcel of the shifting global economy. IDC estimates that in 2012, China will be the largest market for personal computers.

In the near term, this isn’t the best news for U.S. businesses. It’s a sign of how emerging economies like China, Brazil, and India are recovering and expanding faster than the United States, where high unemployment, a lack of consumer confidence, and bickering in Washington have coalesced into the absence of an economic strategy.

Before we get too pessimistic about comparative economics, it’s worth remembering that this is all part of the plan—a plan that could have excellent repercussions for the global economy if everyone involved plays their cards right.

One major problem today, as well as in the pre-crash economy, is that China’s export-heavy approach to growth depends on an artificially devalued currency that makes Chinese products cheaper on the world marketplace—and U.S. products comparatively expensive.

At a series of grand summits in the past two years, American and Chinese officials agreed, at least in principle, that China needs to focus more on putting its own citizens in the position to buy stuff by creating a larger consumer market, while the U.S. should focus on saving more and chill out with the financial crises.

Now that China is the world’s largest market for automobiles and will soon take the computer crown, we’re seeing signs of that strategy moving forward. Success is far from guaranteed, since building this market will require extending more resources, public and private (with Chinese characteristics), to people who don’t have any, a source of political controversy no matter what the culture.

Chinese leaders know that wealthier citizens with more access to technology tend to be more politically demanding, making the development of a significant middle class a necessity to liberals around the world as well as a transition the country, which is undergoing a new wave of serious repression, will need to manage with care to avoid economic collapse or furthering its history of human rights abuses.

But if China can pull it off, convincing more people to buy stuff at home would give the nation the freedom to allow its currency to increase in value. That, in turn, will give the United States a chance to be a more competitive manufacturer around the world, even selling goods and services to all the new consumers in the China and bolstering its own economy. Or, at least, that’s the Big Idea.

Photo via (cc) Flickr User Guy Lundardi