Posted on 05/06/2005 8:54:13 PM PDT by Dr. Marten
China Ping.
LOL
Thats a interesting article. It fails to mention that one of the main reasons why the USSR fell was it wasn't trading(small amount) with the US. They internally refused to create anything except perhaps weapons, nuclear meltdowms, hockey teams and vodka. Thats not the case with China. Our capitalism is supporting their communism.
Agreed. China seems to have really learned from the mistakes of the Soviets. They are building up their economy quietly and quickly. Once they surpass us (in about 15 years, based on the data in this article - maybe sooner, in reality), then they can get to weapons production.
It would be nice to take them out now, while we're still able. And if we're lucky, they'll give us a chance (with Taiwan, North Korea, or Japan).
Huh?
China may not become a superpower, but it can create a huge mess when its economy finally goes down in a combination of credit crunch and labor strife. That is what we would witness.
Fortune 500 types are trying their best to ignore what angry peasants and workers would do. They only thought about selling one billion pair of shoes, TV sets, etc. They have not thought about the down side that hundreds of millions of them could riot and rampage instead of being happy customers.
I think this might be understating Chinese economic potential. After all, they have a real competitive advantage when it comes to labor costs.
"China accounts for about 11.5 per cent share of world GDP
Huh?"
Sounds low to me also. Considering that they're using between 30 and 40 percent of steel, concrete, and lumber, it's probably safe to assume that they're closer to 15%, or more.
It doesn't take a lot of searching with a reliable search engine to find tons of news items describing the huge numbers of nonperforming loans that plague Chi-com banks. These loans keep Mao-era state owned enterprises "operating." Shutting them down would put millions more out of work and the Party fears the result would be a revolution.
It doesn't take a lot of searching with a reliable search engine to find tons of news items describing the components of the Chi-com's inflated GDP just as the components are described here.
Then there is the question of why China should be so reliant on foreign investment when household savings are 45-50 per cent of GDP.
One news item I recall stated that the Party does not dare waste those savings lest there be immediate revolution. The Party needs FDI. Western useful idiots happily transfer the funds.
The only argument I have with the article is "so-called sophisticated observers mistook the Soviet Union’s military hardware as evidence of a robust and growing economy."
B.S. Com-symps and outright communists praised Uncle Joe's workers' paradise but not even liberals were fooled. On the contrary liberals, progressives, and "free traders" pushed hard to transfer technology and wealth to the Soviets to help them become something that resembled an economy lest we play into the hands of the Soviet "hard liners" and we cause a war. Better minds prevailed. Can't say that about how we kowtow to the Chi-coms.
Ping
While I do not disagree that leaving large amounts of real resources and access to lots of labor in forms that destroy value is "misdirecting", this stuff is "savings" or "capital" in no real economic sense. An industry that destroys value is not "wasting savings", it is reducing income.
If you count every loss in the economy - or better still, every mere *cost* in the economy - as "savings" on the part of the workers who don't get value, and "investment" on the part of the industry that only maintains its existing capital stock, you will quickly find very high "rates of saving" and even higher ones of "investment" - but mysteriously, the output of the wealth destroying industry will not go up from its vastly expanded capital. Because its capital hasn't expanded, only been maintained. It just took a capital market transaction to do it, because the industry runs at a massive loss.
How is it that investment vastly exceeds savings while savings are supposedly 45-50% of GDP? Does anybody remotely believe Chinese families just choose to live on half of what their "income" is? Their income is what they are living on, in reality. And any increase in that figure over time, yes, but the latter is the only value that can be given to their "investment". As their real consumption is rising, the real value of their capital is increasing - but only as fast as that. The original cost side of the ledger for anything is irrelevant to real income. The society as a whole can't eat its inputs, only its outputs.
We don't bother making this correction in the west, because real activities that destroy value do not continue, or have to be financed out of taxation or income from capital. They are not financed by capital market transactions, because nobody forces feeds resources into losing propositions. But in any economy with a huge and inefficient state run sector, it has to be made. Otherwise, you just migrate over time to single entry accounting, where all costs are capital transactions and all sales are income.
BFLRAATWMBICF: (Bump for later reading at a time when my brain isn't completely fried.)
China is a communist country.
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