This is part three in the review of China Shakes the World. In here we find the daunting numbers of a population long held back enforcing their will on a global economy.

In some places, new expressways have opened up vast new markets. The city of Wuhu, a river port on the Yangtze’s middle course, was a backwater as recently as 1998. When I first went there at that time, it took me six hours along a bone-jangling, pot-holed road to reach it from Hefei, the provincial captital. When I did the journey again in 2002, it took an hour and a half and Wuhu had been transformed. In just four years, four expressways, a road and rail bridge over the Yangtze and a river port had been built. It was now possible, the vice-mayor told me, to reach 250 million people within eight hours of the city center. ‘That is the population of America,’ he said with a smile.

The only real difference between China’s expressway system and the US Interstate is that, when it is done, China’s will be longer. Although only around 30,000 kilometers have thus far been completed, Beijing plans by 2030 to have laid 86,000 kilometers, a few thousand kilometers more than the US system.In each year since 2004, China has built enough power plants to supply all the electricity needs of a large European economy such as Italy’s or Spains.

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The awe reserved for numbers is quickened when it comes to mathematical relationships and, of these, none is more alluring than multiplication. Always somewhere in the love affairs of foreigners with China down the ages there is the promise of the quantum leap. It was there when the Jesuits in the sixteenth century planned to convert 150 million souls – an opportunity bigger by multiples than any that existed in Europe. It was also evident in the fever of British merchants in the mid nineteenth century when one English merchant observed: ‘If we could only persuade every person in China to lengthen his shirttail by a foot, we could keep the mills of Lancashire working around the clock.’ In a similar vein, William Taft, US Secretary of State and later President, said in 1905 that ‘one of the greatest commercial prizes of the world is trade with the 400,000,000 Chinese. In the modern era since the process of ‘reform and opening’ began in 1978, some $550 billion of foreign direct investment has flowed in, a lot of it accompanied by dreams of exponential growth. ‘I can envision a day when over half the automobiles sold in the world are sold in Asia and perhaps even in China,’ said Joe Gorman, chairman of TRW Inc., the US’s biggest manufacturer of auto parts, in one typical comment. ‘If China were by the year 2010 or 2020 to have as many autos as the current per capita auto population of Germany today, there would be 500 million autos.’

Chinese official, cognizant of the enchantment of numbers, like to boggle the mind on overseas trips. Bo Xilai, the Minster of Commerce, told European officials in 2005: ‘China is a big family. We have 200 million middle school students. Every day 22,000 girls get married; 44,000 babies are born. We eat better since we opened China’s door. Every day we eat 1.6 million pigs and 24 million chickens. Our premier not only wants young people to have a chance to study and grown-ups to have jobs, he also has to take care of 20 million kids in kindergarten and 12 million people aged 80.

These numbers had traditionally had a tempering effect on the leaders. Faced with the need to strike such a delicate balance between available food and demanding mouths, most new rulers made only cosmetic changes. But Mao, the founder of the modern era, was different. His approach was not only revolutionary, but unprecedented. He identified his power base as the rural peasantry and urban masses and ordered the persecution of landowners, capitalists and anyone else with a bad ‘class background.’ No quarter was given, no balance stuck; within three years of assuming power, he had decapitated the rural elite and presided over the murder of an estimated 2 million landowners. Mao did not recognize any authority greater than his own, so the tempering tradition of ‘heaven’s mandate’ had no truck with him. But most decisively of all for the future of China’s economy, he scorned the notion that the scarcity of land was a restraint on population growth. Every mouth, he said, was attached to two arms. People could always produce more than they consumed.

Economically, population forms China’s most basic paradox. It is at once its greatest strength and its gravest frailty. An unparalleled stock of human capital allows it to assume the characteristics of sever countries at once. Its huge pool of low-cost, diligent factory workers arouses envy across the developing world and yet China is not merely a giant sweatship. Mainland universities produce more graduates each year than the US. Nevertheless, these strengths are offset to some considerable degree by the old oppression of numbers. Although China is currently poised to overtake the UK to become the world’s fourth-largest economy, on a per capita basis it ranks just above the world’s poorest nations, with an average income of just over $1,000 a year. At current relevant rates of growth, the size of the Chinese economy will match that of the US a few years before 2040. But at that time too, the children of Ma’s population explosion in the 1960s, 1970s and early 1980s will be into their retirement years. In fact, by 2040 around one-third of the then population – or some 400 million people – will be over the age of sixty. It may be that China will grow old before it is rich.

However, the most important impediment of population is a veriant of the challenge that emperors since time immemorial have had to deal with (and Mao so singularly failed). In the past, the balance each dynasty strove for was that between food and mouths, but the last twenty-five years of development may have banished this concern forever. The crucial equilibrium now is that between people and jobs, and so far it has proven elusive. Even when the economy grows at 9 or 10 percent, it fails by a margin of several million to create the 24 million new jobs required each year. Thus, while china appears to the rest of the world to be enjoying an amazing growth bonanza, the officials working behind the high walls of the leadership compound in Beijing feel trapped in an endless employment crisis.

The pressure of population combines with other features of life in China to create the salient characteristics of corporate China. Chief among these is a tendancy among companies to carry on producing, or even expand production, long after any discernable profit margin has vanished. This behavior is partly down to the mesmerizing attraction of trying ever harder to win a bigger share of the ‘billion consumer’ market, but it is by no means as simple as that. The issue is of critical importance, though, because it helps demonstrate why it is that most manufactured products in China are in chronic OVERSUPPLY – and, by extension, why so many of them are extraordinarily cheap. Virtually any manufacturer selected at random might illuminate the causes behind these various phenomena, but, before I left Chongqing I reconnected with Lifan Motorcycle, a company I had been following for some years. The more I learned about it, and the exploits of its remarkable founder, Yin Mingshan, the more I came to see it as a case study of how Chinese manufacturers often manage to undercut the prices of overseas competitors by a third or 40 percent or even more.

Visible through the windows were motivational slogans painted in red on the white walls of the factory. ‘He does not feel hardship and fatigue is not a Lifan person’ said one. ‘If you do not work hard today, you will search hard for a job tomorrow’ warned another.