'China to Replace US as the Engine for World Economy'

The Peoples Daily (China) ^ | 10.26.02

[Enemy Of The State]

'China to Replace US as the Engine for World Economy'

Taking advantage of World Economic Forum Asian Department Director Dr. Richter's visit to China, our reporter recently conducted an exclusive interview with him on such hot issues as the prospect of China's economy, and the development trend of the world economy. Dr. Richter indicated that China is expected to become a new "engine" for world economic development within five years because it is one of the few bright points of the world economy.

Reporter: The UN, the IMF and other organizations have, in their regular economic reports, lowered their anticipated world economic growth, the US-centered global economic recession tends to become increasingly serious, what's your view about this and when can the world economy get out of a slump?

Richter: The figures released recently by The United Nations Conference on Trade and Development (UNCTAD) show that Foreign Direct Investment (FDI) globe-wide dropped 50 percent compared with last year, this is a very pessimistic figure, among all regions including the United States, Europe and Japan, only investment made in China has witnessed growth, the world economy presents not an optimistic outlook, the globe will possibly enter a new recession which will last a longer time. There exist problems with some large transnational corporations of Europe and America, such as the famous American Ford and Italian Fiat, and some transnational corporations even face the danger of being closed.

The US economy once had all along been the engine for world economic development, but now it is faced with predicament and plagued by chaos, under such circumstances, who can replace the United States to become the engine for world economic development? Is it Europe, Japan or China? The situation in Europe does not make one feel optimistic either, although Japan presently remains the world's second largest economic entity, its banking system is faced with many difficult problems, if its banking system is properly rectified, it may give new hopes, but due to its domestic problems, it is impossible for Japan to replace the United States. Then, who, after all, can replace the United States? Only China! China's economic situation is very good, not only its domestic situation is favorable, but also more and more overseas investments are turned to China which is hopefully to take the place of the United States in five years to become the main motive force for global economic growth.

Reporter: What influence will the deteriorating external environment exert on China's economic development?

Richter: China will not suffer from negative influence, on the contrary, it will possibly get benefit therefrom. China is one of the bright points of the global economy, and it will attract more and more foreign investments. Of course, China also has competitive rivals, both India and Mexico are trying to attract foreign capital.

Reporter: Would you please give a forecast of the prospect for China's economic development, what favorable and unfavorable factors are therein, especially in the aftermath of China's WTO Entry?

Richter: The competitiveness of China's economy is growing in strength, not only State-owned enterprises, but private enterprises as well are witnessing ever-faster development, Chinese enterprises have taken an encouraging step toward globalization, such as Hairer, Legend and TCL, their products are rapidly entering European and American markets, these companies are developing step by step to become global transnational corporations. From a long-term point of view, joining the WTO is beneficial to China, perhaps many transnational companies may create some sort of impact and bring competition on Chinese enterprises, but this is beneficial to China, because only under competitive conditions, can Chinese enterprises experience rapid growth and China's markets become more mature and perfect. In the past, many domestic enterprises were only faced with domestic markets, but now they are confronted with large global markets. Many domestic enterprises have begun to buy up foreign enterprises, for instance, the Shanghai Auto Group participates in buying the share of the ROK's , Daewoo, Petro-China invested in Indonesia and bought the share of an Indonesian oil company.

Of course, China also faces problems that must not be neglected, such as the gap between the east and west economic development, unemployment and the problem relating to the ?¡ãoverheated?¡À infrastructure construction in various localities.

Reporter: In the first half of this year, you stated in one article carried on the Singaporean Strait Times that the Group 8 (the United States, Japan, Germany, France, Italy, Britain, Canada and Russia) should accept China as one of its members. You enumerated in the article many reasons for this, in your opinion, what's the most important point?

Richter: Western countries should change their views about China, many European and American people know little about the situation in China, they should come more often to see for themselves. As to the most important reason, let me give an example. As a member of Group 8, Italy's total GDP amount is incomparable with that of China staying outside the Group, this is the most important index, if Group 8 wants to be representative in the world, it should not neglect the existence of China. Of course, involved here are not only economic factors, but also political factors. The importance of China's economic development has been recognized by more and more people, Western countries should treat China as an equal partner as soon as possible.

Reporter: There are some experts and scholars in the world who express doubts about the truth of China's economic statistics. What do you think about this issue?

Rocjter: I believe that the figures provided by official Chinese sources on economic growth are correct, the trends of China's economic growth are clear to all. Since China is a large country, the composition of various statistical data is very complicated, although we cannot avoid the existence of small errors, whether the growth is 7 percent or 8 percent is not important, small errors will not exert much influence, what is important is that China's economy is still growing steadily.

Reporter: It is said that you are writing a new book on China. Can you say something about this book, what kind of viewpoint are you to present to the readers?

Richter: In this book I will focus on the discussion of three possible scenarios for China's economic development: first, China to replace the United States to become the engine for world economic development; second, China will be plagued by a variety of problems such as stagflation of the Chinese economy and unemployment; third, a mixture of the above two kinds of situation. I think the first scenario is most likely to happen, that is, China will become the engine for world economic development.
 

[<1/1,000,000th%]

Dr. Richter indicated that China is expected to become a new "engine" for world economic development within five years because it is one of the few bright points of the world economy.

HAHAHAHHA!!

Has the ChiCom economy caught up with California yet?

[Revel]

"Does anybody think this could actually happen? That would be very bad."

It is happening. If you keep an eye on Willie Greens posts then you will see just to what extent we are losing American production jobs to China. The government has given our business's every reason to leave the USA. They impose on them every kind of fee and harassment possible here in USA-While opening the door to China and other overseas places. We are bleeding the middle class out of existence since they mainly are the manufacturing sector. You either have a high degree in the proper field or else you work at Burger King. That is what it is coming down to. That is that giant sucking sound you here.

[AdamSelene235]

The world we currently live in is less rational that the one of 20 - 50 - 100 years ago and the trend is toward even more fanaticism and less rationality.

20 years ago we were at the brink of a nuclear holocaust.

Roughly 50 years ago, Europe and Japan were smoking ruins.

100 years ago Europe was was carving up the entire planet into fascistic fiefdoms.

I don't know how you quantify "rationality".

What has changed is our destructive capacity is growing. The Democratization of WMD is not a good thing but a natural outcome of the Cold War.

As for the natural selection of the 'markets' eliminating the cooks and the crooks, keep dreaming. Encouraging and supporting failure while punishing and discouraging success has been the law in most of the worlds and our government is curretly expending lots of resources to enforce the above rule.

Dead on. Government's only legitimate function is the defense of life,liberty and property. The Enlightenment is under attack and is dying. It will most likely perish in Europe. In America? Not if I can help it.

And... thanks for trying so hard to stick a label on my views. Trust me. I'm not happy that we are heading where we are heading - I have kids too. But... I'm sorry to say, we ARE heading that way. If you disagree, please describe Earth let's say, 1000 years from today.

I should have put more glue on that label, it fell right off. I don't think genocide will help anything. Label me an optimist.

[AdamSelene235]

From the CIA's Website:

The onrush of technology largely explains the gradual development of a "two-tier labor market" in which those at the bottom lack the education and the professional/technical skills of those at the top and, more and more, fail to get comparable pay raises, health insurance coverage, and other benefits. Since 1975, practically all the gains in household income have gone to the top 20% of households. The years 1994-2000 witnessed solid increases in real output, low inflation rates, and a drop in unemployment to below 5%. The year 2001 witnessed the end of the boom psychology and performance, with output increasing only 0.3% and unemployment and business failures rising substantially. The response to the terrorist attacks of September 11 showed the remarkable resilience of the economy. Moderate recovery is expected in 2002, with the GDP growth rate rising to 2.5% or more. A major short-term problem in first half 2002 was a sharp decline in the stock market, fueled in part by the exposure of dubious accounting practices in some major corporations. Long-term problems include inadequate investment in economic infrastructure, rapidly rising medical and pension costs of an aging population, sizable trade deficits, and stagnation of family income in the lower economic groups.

Naturally, its the "onrush of technology" not the fiscal and regulatory burden of government.

[RJL]

Then, who, after all, can replace the United States? Only China! China's economic situation is very good, not only its domestic situation is favorable, but also more and more overseas investments are turned to China which is hopefully to take the place of the United States in five years to become the main motive force for global economic growth.

It only makes sense then that the new UN building should be in China, not in the US!

[DAnconia55]

Probably true.

Wouldn't be if we unchained capitalism.

But neither the GOP or the Demons are interested.

[Brian Allen]

The vast prison brutally captured and held prisoner these past almost 55 years by the disgusting child rapist and most prolific mass-murderer ever, Mao Tze Tung and by the psychopathological self-appointed Peking based mob of invading, colonizing, enslaving, lying, looting, thieving mass-murdering Maoist gangster bastards that succeeded him and presently calls itself "china" has as much chance of leading its slaves into world prominence in any field as does Soddom Hisson of seeing next Easter.

"China's" gross turnover for the 12 months following June 30 1997 was comprised 26% of the wealth created by [Until then] FRee British Hong Kong's seven and a half million [Until then] FRee Peoples -- the other 74% the product of "China's" much-vaunted 1.25 billion population.

"China" will never be but a counterfeit Xerox copy of America's Wealth Creating Civilization and will fail because of the very nature of the collectivist state, which is always reacting to what used to be -- and whose nature is to react in the manner of the scorpion to the frog.

To fantasize otherwise is to fall for the psychotic delusion under which the gangsters who call themselves "china" -- and those who serve them -- labor.



Book Review by John Derbyshire

The Washington Times -- April 14th, 2002

Dream On

The China Dream [IE: Delusion!]

By Joe Studwell; Atlantic Monthly Press; 360 pp. $27

The dream of Joe Studwell’s title is the dream of the China market: of 1.3 billion consumers just waiting to be sold clothes, medicine, cars, toothpaste, or whatever else the dreamer has to offer.

As an English writer of the 1840s put it: “If we could only persuade every person in China to lengthen his shirttail by a foot, we could keep the mills of Lancashire working round the clock.”

The dream has been dreamed by many westerners across many centuries. For a very few — the opium merchants of the 19th century, the fast-food franchisers of our own time — it has actually come true. Much, much more often, it has proved to be only a dream, the waking from which has sometimes been abrupt and unpleasant.

In recent years there have been three cycles of dreaming and waking for foreign businessmen eager to tap into the China market. The first cycle began in the early 1980s, after a 50-year period when dreaming about China was out of fashion altogether. With the ascendancy of Deng Xiaoping’s faction following Mao’s death, it became clear that the fantasy economics of the Mao period had definitely been abandoned. So far as industry was concerned, they had mostly been abandoned in favor of the kind of incentivized state socialism attempted in Eastern Europe twenty years before. This was not much noticed, however. What was noticed was Deng’s maxim “to get rich is glorious,” and the revitalization of Chinese agriculture that followed the retreat from collective farming, and the surge in disposable incomes among urban Chinese from a Mao-era base very close to zero. Western businessmen, dreaming the dream, poured in to set up “joint ventures” with Chinese partners. The massacres of June 1989 are a convenient punctuation mark for the end of this first dream cycle. Many businessmen had already woken even before that, though; the book Beijing Jeep, published earlier that same year, told the dismal story of a typical “joint venture” fiasco.

The atmosphere of widespread state terror that followed the massacres offered a splendid opportunity for the Chinese government to administer some unpleasant medicine to an overheated economy. When this had been done to the leadership’s satisfaction, Deng started the second cycle of dreaming with his famous “southern tour” of early 1992, in which he urged his countrymen to go for maximum economic growth. Following the massacres it was clear that the Communist Party had no intention of going away; but it seemed, from Deng’s 1992 speeches, that it might be willing to leave the economy alone. This all happened just as the rising fad for “globalization” was seizing the attention of western business people. Once again, the dream took flight.

The actual experience of western business in China during the 1990s was closely watched by Joe Studwell, a writer on business and economics — he is founder and editor-in-chief of the excellent China Economic Quarterly — who lived in China for the entire decade. He saw the 1990s flood of dreamers arrive, bright-eyed and eager to engage this new, busy China. He watched the bright eyes glaze over as the reality of China gradually revealed itself to them. Signed agreements and “memoranda of understanding” turned out to be worthless; court rulings were not enforced; state-owned enterprises were exempt from costly environmental regulations; expensive licenses, processed by lackadaisical bureaucrats, were required at every turn; counterfeiting and abuse of intellectual property rights were rampant; the early-1990s purchasing-power models for the disposable income of the Chinese turned out to be too optimistic; ad hoc technical standards were used to impede trade; local management personnel were scarce, and of poor quality. As difficulties multiplied, the dream faded.

Then, in December last year, China’s accession to the World Trade Organization became official. As this author points out:

The government committed to the WTO from a position of weakness, not strength, because of quiet desperation, not unified political resolve. It reached for an outside force to do a job it was failing to do itself — the deregulation and de-bureaucratization of China’s economy.

WTO accession arrived just as serious disillusion was setting in among foreign investors in China. There are signs that it has initiated a third cycle of dreaming. Certainly the Chinese government hopes this is so. Knowing that they cannot solve their country’s economic problems without making political reforms they are unwilling to contemplate, China’s communists hope that the standards implicit in WTO membership, and the compulsory procedures for resolving disputes between members, will, all by themselves, force China’s domestic economy to shape up. Joe Studwell shows convincingly why this is unlikely to happen.

The China Dream will inevitably be compared with last fall’s book on the same topic, Gordon Chang’s The Coming Collapse of China (which I reviewed in these pages 8/12/01). Studwell’s book is lighter on cultural insights than Chang’s, but better organized and richer in hard economic facts. He notes, and abundantly documents, such large and intractable truths as the following:

For all the talk of reform, of retreat from socialism, of the unleashing of the energies of the Chinese people, and so on, government payrolls increased all through the 1980s and 1990s.
From being debt-free in 1979, China is now saddled with liabilities that will soon make her the world’s most indebted nation.
“Given the state’s determination to micromanage economic activity, there [is] almost no strictly legal way for foreign investors to make money.”
Studwell offers two possibilities for China’s near future: a long period of stagnation and low growth like the one Japan has been enduring, or a major fiscal crisis, with runs on the banks followed by Latin-American levels of instability and social disorder. He notes that neither scenario offers a very exact analogy to China: a stagnant debt-crushed economy with a per capita GNP of $25K per annum is not the same thing as one with $1K per annum, and Argentina has never had either Chinese levels of social and political control or modern China’s imperial responsibilities and hegemonic ambitions.

The author’s advice to foreign investors is to use the country as a manufacturing base for exports (if you can squeeze in among all the overseas-Chinese doing exactly that), but to engage in the domestic market only with utmost caution. It sounds right to me, though given the violence of regime change in China, and the xenophobic outbursts that traditionally accompany such change, I would add one more thing:

Keep a suitcase packed and ready under your bed at all times.

[Brian Allen]

<< The Chinese just shoot you in the back of the head. Wouldn't be surprised if they charge you for the bullet. >>

They do. The slaughtered's family gets the bill.

And they harvest the deceased's organs for "For-Profit" organ transplants. [As often as not to wealthy Americans of Chinese descent]

[maui_hawaii]

You will always be able to find people who define 'economic engine' and 'economic growth' in their own ways. This is foolish to even think of this person as being serious.

[Pylot]

You are making the incorrect assumption that the government in China actually rules everything. It does not.

China is a collection of Provinces.

Each Province has an alliance made up of Government figureheads, Military leaders and a Gang.

The level of corruption within each alliance member group is hard for an American to fathom.

The notion that capitalism would be allowed to flourish is laughable given the greed and total corruption that makes up the country. Every time an entity became profitable, it would be decimated by payments to the Government, the Military parters and the ruling gang.

It is widely understood in international financial circles that China's banking system is insolvent. Even they acknowledge over 50% non performing loans. Wanna guess who the loans were made to??? Business Fronts owned by the Military and Business Fronts owned by the Gangs, all abetted by the Government.

One of the most common errors that Americans make is to view everything as legitimate and as represented. China is a classic riddle within a puzzle.

One of the most powerless figures in China is their president. Think he could start a war without Military leadership approval? No. Think the Military will ever let Capitalism replace their muscle? No. Think either group would act without consulting their Provincial Gang Leadership? No.

China is not what it seems.

[Southack]

"Label me an optimist."

LoL!

You are diametrically opposed to optimism. Optimists don't run around posting ridiculous gloom and doom articles at every turn. Optimists don't whine that our tax structure is too burdensome to permit us to survive economically, and optimists don't claim that the world is about to homogenize U-238 "gun" atomic weapons.

Optimists look on the bright side. Those aren't examples of looking on the bright side.

You are deluding yourself if you think that you are an optimist.

You aren't.

Furthermore, the Japanese aren't going to surpass the American economy. Nor are the Europeans or Chinese. Nor will tomorrow's new supermen, the Indians.

Of course, I fully expect you to fall hook, line, and sinker for whatever the next gloom and doom fad that comes along.

Heck, you're probably still shorting American real-estate stocks, too...

[AdamSelene235]

You are diametrically opposed to optimism. Optimists don't run around posting ridiculous gloom and doom articles at every turn. Optimists don't whine that our tax structure is too burdensome to permit us to survive economically, and optimists don't claim that the world is about to homogenize U-238 "gun" atomic weapons.

Well, those things are just *obvious* Southack.

Furthermore, the Japanese aren't going to surpass the American economy. Nor are the Europeans or Chinese. Nor will tomorrow's new supermen, the Indians.

The Chinese will give us a run for our money. Don't worry about the Indians, Euro-weenies or Japanese.

Heck, you're probably still shorting American real-estate stocks, too...

You bet....Shorted and putted FNM @ 82 , its in the high 60's now..One of my better moves....Sadly the duration gap has contracted a bit...but they have cooked their books to come up with some fake equity for the shareholders...Profits are up, if you ignore their unrealized derivatives losses..in that case then they are down quite a bit...defaults should start piling up shortly and just about anything could happen with interest rates.... .....where shall I ship the crow when they go down?

I'm very optimistic about their collapse...

[AdamSelene235]

world is about to homogenize U-238 "gun" atomic weapons.

Oh, and BTW, you won't have much luck with a u-238. Try 235....If you forget, check my moniker.

[TaRaRaBoomDeAyGoreLostToday!]

bumped and bookmarked

[TaRaRaBoomDeAyGoreLostToday!]

BumPing

[Southack]

"defaults should start piling up shortly and just about anything could happen with interest rates.... .....where shall I ship the crow when they go down? I'm very optimistic about their collapse..."

IF real estate collapses nationwide, then I will deserve to eat crow, but I don't see it happening.

Delinquent mortgage payments are less than a third of the percentage today than they were at their peak during the late 1980's real estate problems (when quite literally hundreds of Savings and Loans went belly-up).

It's those late payments, as a percentage, that forecast what will happen to pricing. In the 1980's, with hundreds of S&L's busting and late payments hitting an all-time high, real estate prices DID edge down some. Of course, unemployment was higher back then, and interest rates were higher back then, so one would EXPECT that the 1980's real-estate drop would be more severe than whatever downturn we see today.

Yet you seem to be betting that today's drop will be more severe.

So you and I fundamentally disagree on that point. I just don't see today's real estate suffering MORE than what happened in the 1980's, due to the different "fundamentals" as described above.

And your position certainly betrays your claim to be an optimist, btw!

[Free the USA]

http://www.freerepublic.com/perl/bump-list

[Southack]

"Oh, and BTW, you won't have much luck with a u-238. Try 235....If you forget, check my moniker."

Why, do you want to be known as Atom Selene 235, as in the old Japanese lunar landing project Selene, or just that 235 is the end of your nickname?

[INSENSITIVE GUY]

Who's to blame for this?They could'nt have done it without our stupid help.AMERICA,QUIT FEEDING YOUR ENEMIES!

[TheEngineer]

'China to Replace US as the Engine for World Economy'

Ha! It's about time somebody did. I'm getting tired of all these 60-hour work weeks. I think a little role-reversal would be in order... They can take over my computer programming work, and I'll get a job making rubber dogsh*t. ;-)