Posted on 11/15/2012 9:36:53 PM PST by bruinbirdman
As expected, hardliners have won the power-struggle at the top of China's Communist Party, or at least they have won the latest round judging by the line-up of the Politburo's Standing Committee this morning.
This is beginning to look like a shocker for the world economy, with big implications for global growth, trade, oil and commodity demand, investment flows, etc.
Two key reformers were shut out of the seven-man Standing Committee: Guangzhou party chief Wang Yang and the head of the national party organisation Li Yuanchao.
Wang Qishan – the torchbearer of economic modernisation – did make it onto the committee but will be in charge of fighting graft, not fighting dinosaurs.
The North-Korea trained Zhang Dejiang – a champion of the state-owned behemoths – has risen further to prominence.
There is a growing risk that China will hit the "invisible glass ceiling" that lies in wait for catch-up economies that rely too long on cheap labour and imported know-how, failing to make the crucial switch to a different kind of model before it is too late.
It is not easy to make the leap to self-sustaining growth on the creative frontier. No country has achieved it with a fully authoritarian system.
The outcome of the 18th Party Congress – the biggest change in Communist cadres since the Revolution in 1949, with 70pc of top jobs up for grabs – has shortened the odds that China will make the change in time. One starts to see the grim prospect that the country could grow old before it gets rich, which is not good for the world.
The main thrust of this orthodox revival in Beijing is of course political, not economic. China's leadership have watched the Soviet collapse, the revolutions of central Asia,
(Excerpt) Read more at blogs.telegraph.co.uk ...
North Korea? Yeah, now there's a success story to emulate!
Nothing lasts forever.
Those who did straight line projections in the 1960’s predicted that Communism would take over the world, in the 1970’s predicted that OPEC would buy up and rule the world, in the 1980’s predicted that Japan would rise preeminent, (US was back in the 1990’s predictions) and in the first decade of this century, that China would overwhelm everyone economically.
China is not only are hitting hard limits to continued growth the way they have been doing it, they have some serious problems that could lead to rapid onset economic crises, rather than just slowing growth. In any event, the next decade is very unlikely to see the same rapid advance as the last.
Nothing lasts forever.
Those who did straight line projections in the 1960’s predicted that Communism would take over the world, in the 1970’s predicted that OPEC would buy up and rule the world, in the 1980’s predicted that Japan would rise preeminent, (US was back in the 1990’s predictions) and in the first decade of this century, that China would overwhelm everyone economically.
China is not only are hitting hard limits to continued growth the way they have been doing it, they have some serious problems that could lead to rapid onset economic crises, rather than just slowing growth. In any event, the next decade is very unlikely to see the same rapid advance as the last.
Never underestimate the ability of a totalitarian regime to survive internal disasters (i.e. the Great Leap Forward and the Cultural Revolution), and to simultaneously remain a regional and world threat to peace.
You ain’t dealing with Luxembourg.
The Reds are crazy like a fox, a nuclear, blackmailing fox in the henhouse of the Pacific, and you dont’ see anyone strong enough standing up to them.
Scratch the “Big E” from our fleet. Add two more to the Red Chinese Navy. That is not good.
A professor of mine, an old OSS/CIA hand, once told me that “If Red China wants a 100 nuclear scientists, it will produce/get a 100 nuclearl scientists” no matter what else is going on.
Remember that. It is still operational re their power-projection aims and means.
And we owe them a WHOLE lot of money...
I agree that they are very dangerous and have a lot of capability/potential capability, but they are not supermen. In fact, several trends that supported their rapid growth are running their course. They will have to make major adjustments - if they can.
Demographically, they capped out in 2010 - economic growth will get less of kick from population growth going forward.
They are no longer the relatively low wage provider that they were - new investment is starting to shift to lower cost competitors like Vietnam, the Philippines, etc. Investors also have seen that it is easy to get in, but hard to get your money out - like the Chinese finger trap.
Their banking system is a house of cards with more fraudulent assets than real.
Inefficient State Owned Enterprises have been growing like fungus based on political power, taking over a growing share of the economy.
They are accumulating enemies, and a growing regional consensus sees them as a threatening bad actor.
They have a bunch of ethnic minorities that they have atrociously abused (Tibetans, Uighurs, etc.). They have a bunch of Han Chinese that they have atrociously abused. (most of them). They have riots pretty much every week somewhere in the country.
Corruption is monumental - the average Congressman-equivalent in China is worth $100 million (US). The top guys are multi-billionaires. They run the place like mafia families.
Their rampant abuse of WTO rules is developing a growing consensus to crack down on their unfair subsidies, barriers to entry, theft of intellectual property, currency manipulation, dumping to bankrupt competitors (e.g. rare earth mineral production), and so on.
They can’t grow on forever they way they did. Most likely, growth will slow to more modest rates. Quite possibly they could take some hard setbacks, like the recent 1/3 drop in the aggregate value of their real estate - a faster and further drop than the US housing crisis.
++++++++They are no longer the relatively low wage provider that they were - new investment is starting to shift to lower cost competitors like Vietnam, the Philippines, etc. Investors also have seen that it is easy to get in, but hard to get your money out - like the Chinese finger trap.
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Exactly, in quite a developed region of China industrial laborer won’t work for less than twice of average Mexican or Ukrainian wage. Let alone Vietnam, India or Bangladesh. And a quality of labor and end product are still Chinese.
++++++They can’t grow on forever they way they did. Most likely, growth will slow to more modest rates. Quite possibly they could take some hard setbacks, like the recent 1/3 drop in the aggregate value of their real estate - a faster and further drop than the US housing crisis.
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Numbers of Chinese growth says nothing. Most of this growth are highways to nowhere, empty cities in a middle of nowhere, powerplants who has no clients on grid etc.
Chinese have a different approach towards gov then we do. In China to enter political office one has to be a member of the Communist Party and pass the Civil Service Exam. The Exam insures that the individual at minimum can read, do math, possess basic knowledge in military strategy, economic principles, etc, etc, etc. Leaders are groomed based on their performance in lower positions and projects. The Chinese gov system is more like a corporation then a gov. China’s problem is nepotism and corruption. At Main Street level, Maoist China had the least corruption compared to the current free market China. That is why there is a yearning for Maoism.
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