The author responds: Thank you for the many comments on both the ideas mentioned in the article and ones that you believe should have been there.

Many readers suggested a much greater likelihood of China taking a long term-lease on a large region in Africa than in Mexico. Some also noted that China’s drive for access to minerals made a move in Africa likely, while others, including some readers in Mexico, argued that nationalism would override any economic benefit, preventing the kind of investment I proposed. China could indeed cement a long-term lease on mineral-rich land in Africa in 2009, but to me such a move would not be very surprising.

The “Mexico” suggestion, on the other hand, focused on accelerating the migration of manufacturing from China to parts of the world that Chinese companies find themselves ill-equipped to penetrate. With this lens, if I were to highlight a possible African target, it would be Morocco. Such a move would be bold, but possible. Morocco has a strong physical infrastructure (especially its ports) and its getting stronger, a track record of working with multinational investors, and business-oriented leadership. There have been several very high-level business and political contacts between the two countries recently. Perhaps as some wrote, an effort to secure a large tract of foreign land for manufacturing would more likely come in stages, rather than as a defined goal from the start.

Several readers also questioned why I did not include more technology trends, for example that China might be at a tipping point in taking global leadership in important parts of the IT and biotech industries. In IT, while China is clearly developing fast, especially in areas such as embedded software, the country still lacks the critical scale for domestic champions to become global leaders in the near term. (for more, read “The cost of going global for China’s high-tech companies”) The government has certainly focused on biotech, for instance through directed investment, and Chinese medical equipment manufacturers have become internationally competitive in midrange products in recent years. I am not close enough to the industry, however, to argue whether 2009 could see a tipping point.

A third area that drew many comments was developments in the domestic economy – growth rates, housing prices, demand for imported commodities, and social unrest, in particular. The global slowdown has clearly amplified government actions to cool an overheating economy that were launched between late 2007 and mid-2008. As a result these programs have overshot the downside on growth. Does the Chinese government control the levers to turn this around, and how long will it be before they show an effect? My answers are yes and late 2009. As I wrote this, the Chinese government’s $500 billion spending program had just been announced. Clearly the government has taken notice.

Only a year ago the focus in China was on labor scarcity, rising labor costs, rising commodity prices, and an inflationary spiral. Squeezing out some of the low-value-added manufacturing in textiles and toys was clearly a national objective, even at the cost of significant economic and social disruption in places like Dongguan in the Pearl River Delta. Similarly, taking some of the froth out of the real estate market in key cities was a clear goal. But unfortunately in this case the levers employed didn’t take into account regional differences and as a result created unintended stresses.

We know China’s economic growth is slowing. If there’s a potential “surprise,” it is whether the country can create a V-shaped recovery and return to a growth rate of 9 percent or more by the end of 2009. I believe it can. In 2009, the government certainly has the fiscal resources to reduce taxes, to accelerate needed spending on infrastructure, and to encourage state-owned enterprises, such as the telecom operators, to do the same. These operators, by the way, are budgeting close to $50 billion in investments among them in 2009. Together, direct government spending and the stimulus offered by businesses make a fast recovery possible.

I look forward to further debate.

Quite the thought-provoking piece. I do indeed find most of your suggestions reasonable. The only one that I'm not so sure about is whether the Chinese government would actually lease an entire geographic region of Mexico.

Why? Because at the end of August, I attended a brown-bag-lunch seminar at Harvard with Tsinghua University's Professor Yan Xuetong. Beyond the big-picture, Dr. Yan discussed a wide variety of specific geopolitical decisions promulgated this year for Hu's second term. Among them: China will seek to stay out of Latin America. China views the Americas generally as "the US's turf" and sees no reason to get directly involved. The biggest reason for this is that Latin America is so culturally different from China that the PRC believes it's unlikely to work out well.

Thus, for geopolitical reasons if not for business reasons, I deem it unlikely that the Chinese government would get directly involved with leasing land in Mexico. Perhaps, however, we might see it from China's private sector.

The odds favor a major economic downturn in China in the medium-term. The global slowdown will widen the subtle cracks in the seemingly invulnerable economy by exposing the excesses that have been built into investment levels and asset values.

A good article but unrealistic. None of the possibilities seem to be consistent with Chinese characteristics. They are all spontaneous and sudden, while the Chinese tend to proceed slowly, deliberately, and cautiously. If you were to shift the target year from 2009 to 2014 then one can expect some dramatic change.

A scenario not included is that China reduces its consumption of minerals and puts their over production in the market. It would be a disaster for emerging economies based on mineral extraction.

An informative article, but it misses one major point related to the IT sector. Soon it would be safe to say that the Chinese IT sector will outgrow and outperform the Indian IT Sector. The Chinese have started to reason where and why they are lacking and are coming up with ways to overcome this deficiency in communication skills and spoken English, and have started to work hard on it.

Mexico? How about a part of Africa? I hear that China has a growing presence there as a business partner for natural resources. Lots of issues, sure, but it’s also an untapped resource for a country willing to invest in developing and investing in ways that have not been tried before.

As a Mexican I’m intrigued by your forecast about the Chinese government buying a 50-year lease on an entire geographic region of Mexico. Given the current political environment, dominated by pseudo-nationalistic claims, I doubt that such thing is possible. I assume that this would create jobs for Mexicans—now returning from the US due to the financial crisis—although it will first be necessary to perform a significant amount of political work.

How about this scenario: In a bid to secure sources of raw materials, China continues to invest in African nations, thereby building infrastructure. Africa becomes the new location for low-cost manufacturing, and China reaps the benefits for its own development. Eventually a struggle will develop between nationalist forces in Africa and Chinese interests wanting to determine who will control these resources.

China’s appetite for resources is not mentioned. I see major acquisitions of multinational fuel and mineral suppliers across the globe, and major agricultural ventures in Africa (probably Angola).

My contribution: China changes its US dollar denominated foreign currency reserves to Euros.

China’s foreign currency regulator buys US dollars and other foreign currencies and stockpiles them in US Treasury Bonds and similar assets until approximately three quarters of its reserves are in US T-Bonds. In 2010, China decides to change its foreign currency portfolio's structure and chooses Euro and Euro-zone treasury bonds as its main investment instrument. Now, 75 percent of China’s foreign currency reserves are in Euro-denominated instruments with the rest in US dollars and yen. This move weakens the US dollar that has only started its recovery from the current financial crisis.

Mr. Orr’s “Seven ways China might surprise us in 2009” are all quite plausible but also, with the exception of an office building collapse, largely positive for both China and the world. I hesitate to introduce hand wringing into the conversation but there may be a few potential negative scenarios to consider as well.

For example, a global economic downturn reduces the rate of growth in China to the point we see some combination of:

a) The bursting of a real estate bubble in many fast growing areas, the loan defaults of which reverberate back through a banking system which holds on its balance sheets many bad and under performing loans. The Chinese government uses its massive capital reserves to prop up the banks, thus impacting global currency values and potentially causing international capital to flee the country.

b) A fall off in exports combined with an over capacity in production causes a panicked Chinese government to subsidize or cause a fire sale of those products on international markets. A protectionist Obama administration and US Congress introduce retaliatory measures, thus sparking a potential trade war.

c) The rate of economic growth is insufficient to absorb the continued mass influx of additional workers, sparking social unrest and government crackdowns.

I must say that I prefer Mr. Orr’s scenarios to any of these.

With the FDA opening offices in China in late 2008, and subsequent dramatic regulatory oversight increasing, China in 2009 becomes the number one biotech OEM supplier of medical devices to the US. Labor costs, such that they are in Mainland China, start playing a significant role in COGS while still maintaining a high quality product.