Posted on 02/03/2016 11:49:30 AM PST by Zhang Fei
SPIEGEL: After the stock market turbulences, does it surprise you that people have started to worry?
Zhang: China has consistently surprised us. When I returned from the United States 20 years ago, it was unimaginable that we would end up where we are now. What China has achieved defies all logic. I credit this to the hard work and enterprising spirit of the Chinese people.
SPIEGEL: Can you give an example?
Zhang: I am a runner. Last October, there was a marathon here in Beijing. I didn't participate this time, but friends told me that the run wasn't prepared too well. The organizers had only arranged about three hours' worth of food and water supplies. Most people don't finish within three hours, however. Too bad for them -- or so it seemed. In fact, however, even those finishing last were perfectly taken care of, particularly during the fourth and fifth hour when demand is highest.
SPIEGEL: Why?
Zhang: Because people along the route had realized that there was demand and quickly organized supply. That's so Chinese. In a well-organized country like Germany, such a problem may not have arisen in the first place, but in China people immediately recognized an opportunity.
(Excerpt) Read more at spiegel.de ...
Everyone was saying “the old model doesn’t work anymore” back during the internet bubble.
Bill said it to Monica right around the time the internet bubble started.
This is just Lenin’s NEP rehashed.
The command economy system was never viable. It is contrary to the nature of man.
Hillary’s alternate campaign slogan: Old Grey Mare just aint what she used ta be!
Good article. There are any number of “progressive” local government officials in the USA who would benefit from traveling to China and seeing what the natural result is when government is too preoccupied to waste time micromanaging small business. The trip would challenge every premise they hold dear. :)
China’s waking up to the amazing realities of the free market economy.
America which became the most prosperous and strongest nation on earth through the free market economy has forgotten the advantages and strengths of the free market.
China and America used to be going in opposite directions, America towards freedom and prosperity, China towards totalitarian slavery and dearth. America and China continue to go in opposite directions except now, America is headed for socialism and lack while China is headed toward free enterprise, economic expansion, and wealth.
Amazing.
Xin sure nailed that one! You can go to the most out of the way little towns in America which won't support a McDonald's or a DQ and you'll still likely find a restaurant run by a Chinese-American family.
It has been that way almost since the 1880s when the railroad was built. Read the history on out-of-the-way former railhead towns like Milford, Utah and Benton, Wyoming and you will find Chinese restaurants and businesses were as much a part of the Wild West landscape as saloons, cowboys, outlaws and U.S. Marshals.
It is almost surprising that Europeans and not the Chinese "discovered" America due to an early 1400s quirk in Chinese history which caused the ruling dynasty to downsize what was then the biggest fleet and trading empire in the world.
As you point out, many factors contributed to China’s rapid growth in recent decades. Some can’t be replicated, like the demographic wave that drove expansion for a generation, but will be a drag on the next generation. Likely the Government’s long run of explosive spending on infrastructure will be financially unsustainable in the near to mid future. The low-cost manufacturer advantage is likely gone for good, and previously successful currency and trade manipulation strategies have become well recognized by other countries. Intellectual property theft profits will probably never again reach the growth rates of their heyday.
Chinese people (like Jews) tend to outperform other ethnic groups economically, in many different setting around the world. Cultural factors drive that, like the Confucian value of study, education and self-cultivation; as well as an entrepreneurial tradition, and ties of family support. That is China’s great advantage going forward.
The major determinant will of course be the Government in China, as it has been since the communist dictatorship was imposed. If the Chinese people were free of state control and Party corruption (but had stable rule of law), the boom would quickly overcome the painful adjustment that now seems imminent.
Will the Government unleash the people, fortify their cages, or be overthrown? That is the question.
LOL - sounds like old fashioned capitalism at work... supply and demand... And yeah that works in the US AND in China and everywhere people trust free markets.
ROTFL
Do you really think so? I googled 1980 Chinese population, and came up with the following - China: 981m in 1980 and 1,338m in 2010 (36% increase) vs US: 226m in 1980 and 309m in 2010 (36% increase).
My impression is that the countries with the fastest population growth have tended to lag in GDP per capita growth, probably because the resources of the state are not infinite. India has a literacy rate of 74% (vs China's 100%), possibly because its education budget has lagged its much faster (than China) population growth. Pakistan's poor school-age children are educated in madrassas where they spend their days memorizing the Koran and the hadiths because they can't afford school fees at government-subsidized institutions.
Clearly education and other factors influence economic outcomes.
All other things being equal, demographics have a powerful independent effect on the economy.
The most economically stimulating element of the population are young adults, just starting out (that years graduating class). They need everything to furnish their households, will be raising expensive families, and have the energy to work long hours and second jobs. There had been a growing graduating class in China every year during the boom.
Additionally, China’s migration from the farms to the cities was the largest in human history - very stimulative.
Both of those powerful trends have peaked, and are now on a slowing trajectory.
The one child policy is an extreme intervention, whose effects are now pronounced in the age and gender distribution of China - it will take a generation to normalize, if allowed to do so.
The “old model” isn’t working for Red China anymore because they are losing jobs to Southeast Asian countries like Vietnam, Laos, Burma/Myanmar, etc. (just as it no longer worked for us when we lost those jobs to Red China decades ago).
Churchill thought the NEP was basically Lenin's turn back towards the economic policies of the Tsar:
"In the middle of April [1917] the Germans took a sombre decision. Ludendorff refers to it with bated breath. Full allowance must be made for the desperate stakes to which the German war leaders were already committed. They were in the mood which had opened unlimited submarine warfare with the certainty of bringing the United States into the war against them. Upon the Western front they had from the beginning used the most terrible means of offence at their disposal. They had employed poison gas on the largest scale and had invented the "Flammenwerfer". Nevertheless it was with a sense of awe that they turned upon Russia the most grisly of all weapons. They transported Lenin in a sealed truck like a plague bacillus from Switzerland into Russia. Lenin arrived at Petrograd on 16 April. Who was this being in whom there resided these dire potentialities? Lenin was to Karl Marx what Omar was to Mahomet. He translated faith into acts. He devised the practical methods by which the Marxian theories could be applied in his own time. He invented the Communist plan of campaign. He issued the orders, he prescribed the watchwords, he gave the signal and he led the attack.
"Lenin was also Vengeance. Child of the bureaucracy, by birth a petty noble, reared by a locally much respected Government School Inspector, his early ideas turned by not unusual contradictions through pity to revolt extinguishing pity. Lenin had an unimpeachable father and a rebellious elder brother. This dearly loved companion meddled in assassination. He was hanged in 1894. Lenin was then sixteen. He was at the age to feel. His mind was a remarkable instrument. When its light shone it revealed the whole world, its history, its sorrows, its stupidities, its shams, and above all its wrongs. It revealed all facts in its focus -- the most unwelcome, the most inspiring -- with an equal ray. The intellect was capacious and in some phases superb. It was capable of universal comprehension in a degree rarely reached among men. The execution of the elder brother deflected this broad white light through a prism: and the prism was red.
"But the mind of Lenin was used and driven by a will not less exceptional. The body tough, square and vigorous in spite of disease was well fitted to harbour till middle age these incandescent agencies. Before they burnt it out his work was done, and a thousand years will not forget it. Men's thoughts and systems in these ages are moving forward. The solutions which Lenin adopted for their troubles are already falling behind the requirements and information of our day. Science irresistible leaps off at irrelevant and henceforth dominating tangents. Social life flows through broadening and multiplying channels. The tomb of the most audacious experimentalist might already bear the placard "Out of date". An easier generation lightly turns the pages which record the Russian Terror. Youth momentarily interested asks whether it was before or after the Great War; and turns ardent to a thousand new possibilities. The educated nations are absorbed in practical affairs. Socialists and Populists are fast trooping back from the blind alleys of thought and scrambling out of the pits of action into which the Russians have blundered. But Lenin has left his mark. He has won his place.
"And in the cutting off of the lives of men and women no Asiatic conqueror, not Tamerlane, not Jenghiz Khan can match his fame. Implacable vengeance, rising from a frozen pity in a tranquil, sensible, matter-of-fact, good-humoured integument! His weapon logic; his mood opportunist. His sympathies cold and wide as the Arctic Ocean; his hatreds tight as the hangman's noose. His purpose to save the world: his method to blow it up. Absolute principles, but readiness to change them. Apt at once to kill or learn: dooms and afterthoughts: ruffianism and philanthropy. But a good husband; a gentle guest; happy, his biographers assure us, to wash up the dishes or dandle the baby; as mildly amused to stalk a capercailzie as to butcher an Emperor. The quality of Lenin's revenge was impersonal. Confronted with the need of killing any particular person he showed reluctance -- even distress. But to blot out a million, to proscribe entire classes, to light the flames of intestine war in every land with the inevitable destruction of the well-being of whole nations -- these were sublime abstractions.
"Lenin was the Grand Repudiator. He repudiated everything. He repudiated God, King, Country, morals, treaties, debts, rents, interest, the laws and customs of centuries, all contracts written or implied, the whole structure -- such as it is -- of human society. In the end he repudiated himself. He repudiated the Communist system. He confessed its failure in an all-important sphere. He proclaimed the New Economic Policy and recognized private trade. He repudiated what he had slaughtered so many for not believing. They were right it seemed after all. They were unlucky that he did not find it out before. But these things happen sometimes: and how great is the man who acknowledges his mistake! Back again to wash the dishes and give the child a sweetmeat. Thence once more to the rescue of mankind. This time perhaps the shot will be better aimed. It may kill those who are wrong: not those who are right. But after all what are men? If Imperialism had its cannon food, should the Communist laboratory be denied the raw material for sociological experiment?
"When the subtle acids he had secreted ate through the physical texture of his brain, Lenin mowed the ground. The walls of the Kremlin were not the only witnesses of a strange decay. It was reported that for several months before his death he mumbled old prayers to the deposed gods with ceaseless iteration. If it be true, it shows that Irony is not unknown on Mount Olympus. But this gibbering creature was no longer Lenin. He had already gone. His body lingered for a space to mock the vanished soul. It is still preserved in pickle for the curiosity of the Moscow public and for the consolation of the faithful. Lenin's intellect failed at the moment when its destructive force was exhausted, and when sovereign remedial functions were its quest. He alone could have led Russia into the enchanted quagmire; he alone could have found the way back to the causeway. He saw; he turned; he perished. The strong illuminant that guided him was cut off at the moment when he had turned resolutely for home. The Russian people were left floundering in the bog. Their worst misfortune was his birth: their next worst -- his death." - Winston S. Churchill, The World Crisis, Vol. 5.
Stalin ended the NEP four years after Lenin died and set the course for 60+ years of stagnation for the Russian Empire.
Wait till the ChiComs switch form building benign fake cites (at the west's request ) to building a real blue water fleet to sustain their workforce.
China would still be a dung burning rice paddy cesspool if the USA had not meddled in world markets starting with Nixon.
China is a fake house of cards ready to fall apart.
Once China ended its self-imposed economic isolation and let the market decide what and how much of it to make, it's not clear that anything could have stopped its progress. The capital and technology to catch up wasn't solely in US hands. China's neighbors and Europe invested huge sums in China in expectation that it would resume its place as a major economic power on the strength of its population size alone. Without US involvement, Chinese growth would have been slower, but it would likely have continued. Without manufacturing abroad in low-cost labor locales (in China or otherwise), US growth would also have been slower, and American companies would have had to compete on price with cheaper European Chinese-assembled products.
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