IS CHINA'S ECONOMIC BOOM A MYTH?

The New Republic ^ | Issue of 12/16/02 | Joshua Kurlantzick

[Jorge]

Um why is Christianity neccasary for successful capitalism?

Interesting question. Because it certainly seems like Christian values and ethics precede and accompany successful capitalism and prosperity.

And why is it that Islamic cultures seem to lag behind the rest of the world when it comes to economic success?

[spycatcher]

China dream alive and kicking (economy ripe for collapse)

Is China the Next Argentina?

[formosaplastics]

This writer feels threatened by China not because of its economy, which he feels is a sham, but because he fears that once this Chinese economic "bubble" bursts, that China will become an "even more" authoritarian and possibly aggressive and nationalist country than presently. Wow, what a convoluted argument! Isn't China today already authoritarian and not behaving in such a manner? Quite frankly, the world is more afraid of America acting haughtily and unilaterally in a "hegemonic" sort of way these days than it is China. Secondly, if the writer really does fear that any collapse of China's economy will lead to China's becoming the misbehavin' monster that he imagines it will become, then the writer should do all he can to help China's economy succeed, should he not? So all people who agree with the writer's ideas should shop doubly hard at Wal-Mart!

[formosaplastics]

Most of all, the writer fears what China will become if its economy fails more than what China will become if its economy succeeds. If it fails, then China will become the next Nazi Germany, the writer is basically saying. To avoid this outcome, therefore, Americans should do all they can to support China's economy by continuing to shop this Christmas at Best Buy, Bed Bath & Beyond, Wal-Mart, Kohl's, etc. Exports helped Japan, S. Korea, Taiwan, etc. all get rich, but their wages are all too high now to make cheap goods for American consumers so China naturally has taken their place. The danger lies in China's economy failing, not succeeding, according to this article.

[TigerLikesRooster]

Re #44

The fixation on China borders on mania seen in recent stock markets. Now some see the serious downside of Chinese economy. For a while, China has been where multinationals can realize all their dreams, at least in their rather rosy view. The prime example of the benefit of globalization. Now they are coming from their fantasy slowly.

The twin fantasies of rocketing Chinese economy and never-ending bull market fed on each other for several years.

[formosaplastics]

China's economy today is like Japan's or S. Korea's several decades ago and is pretty much following the same, proven, one-party, pro-capitalist path of development these other countries used to develop middle-class populations and leapfrog from Third World to First World status within a generation. The rise of E. Asia over the past 50 years is no "myth" but the story of our time with China being the latest iteration. If you want to see a demolished "myth," check out the economies of today's Third World republics, which are floundering. As we speak, foreign investors continue to flee democratic Latin America, Indonesia, Turkey, S. Africa, even Taiwan.

[TigerLikesRooster]

Re #46

It is true that China tries to be another success story in E. Asia. The problem is that China has bull market mania mentality which makes them believe that they will leapfrog into an economic superpower in a generation, despite the level of corruption on the order of magnitude or two higher than S. Korea or Japan and other shaky economic institutions. In addition, it is swept into this globalist tide. The progress has been tough even in relatively small S. Korea which has only one ethinic group and culture to deal with.

China seems to brush aside such problems too easily. If China pushes too hard and play too loose, it will be burned badly. China is really poorly prepared for any serious setback of its economy. That is what I tried to say.

[SwordofTruth]

Party-controlled media companies have produced popular videos glorifying the September 11 attacks. In one video, as the camera focuses on the rubble of the World Trade Center, a commentator says, "Blood debts have been repaid in blood. ... This is the America the whole world has wanted to see."

If there is any American out there that is not convinced that communist China is not our enemy, then I pity them. They hate us enough to celebrate our deaths. China should be our number one enemy, since they have the potential to inflict the most damage upon us, and have already threatened to nuke LA.

[formosaplastics]

Over the past 2 decades or so, there's been a democratic revolution throughout most of the Third World. The result has been that today these Third World republics are dysfunctional jokes and basketcases, plagued by eternal legislative gridlock and delayed economic reforms. A recent Washington Post op-ed noted that Latin America's economic growth rate after it adopted democracy 20 years ago is only 1/10th what it was in the preceding 20 years, when Latin America was ruled by pro-capitalist, authoritarian regimes like Pinochet's in Chile.

The advocates of democracy naively believed that if Third World countries adopted democracy, these countries would somehow magically become mirror images of First World democratic society overnight. But after 50 years of democracy, does India look like America yet? Do any of these other Third World republics look anything like America yet?

The French and American Revolutions are collectively known as the "Bourgeois Revolution" because by the late 18th century, large middle-classes had developed. These large middle-classes were born during a century of "enlightened despotic" European rulers, who codified the laws and made other reforms that set the stage for capitalism to flourish and large middle-classes to develop.

But if you mindlessly graft a democratic political structure on a majority-poor Third World country, what else do you expect to get other than some typical Third World legislature, which is dominated by socialist, pro-big government politicians? These socialist politicians cater to their poor constituents by blocking every pro-capitalist economic reform imaginable. Instead, they favor continuing the massive welfare state that gives their poor constituents "guaranteed government jobs for life."

When you introduce democracy in a country with a majority-poor population, how else do you expect the democratically-elected politicians to act? Even in America, the poor constituencies overwhelmingly vote for the socialistic Gephardts and Daschles of the world. So imagine how much worse the situation would be if America, like most Third World republics, had a 90%-poor and socialist-voting population!!!

[formosaplastics]

All developing countries, not just China, try to develop their economies as fast as possible. What else would you have them do? Voluntarily stay poor? And Japan, Korea, etc. all had "bull market mentalities" about their own economies before, so why do you want to selectively criticize China during its own fast-growth period? If you're worried about such a trivial thing as what kind of "mentality" others have and think Chinese should be studying the humanities curriculum instead of more immediate concerns like real economic development and progess, you have a strange set of priorities. China's got all the ingredients that all the other Asian "tigers" had several decades ago (one-party government, pro-capitalist policies, cheap labor, infrastructure, educated work force, work ethic, etc) but just on a larger scale than any previous "tiger," so people feel confident about China's economic future moreso than other developing countries'. Also, Japan, Korea, etc. were not "corruption-free" several decades ago either, but that didn't stop them from quickly developing their economies and becoming First World countries, did it? Countries don't develop into "corruption-free" First World countries overnight, but it is a process. Today's First World countries all went through similar phases as well. And China, despite not being "corruption-free," today attracts more foreign investment than any other country now. These investors (American, Japanese, Korean, etc.) have weighed the various investment opportunities available (including in their own countries) but prefer to invest in China instead.

[TigerLikesRooster]

Re #49

If PRC is governed by the likes of Lee Kuan-Yew and his bureaucrats, I would have more hope. But it does not. Its political class is worse than those of S. Korea or Japan at any time. And problems it has are more difficult to solve.

China has set itself up into a mess where no amount of democracy or enlightened dictatorship can help.

[formosaplastics]

Just for your information, are you aware that it was last year that Koreans first started to invest more in mainland China than in the US, about $300 mil. vs. $275 mil.? This is the first time in history that Koreans have ever invested in China more than in America. All the Koreans I speak to know in their bones that China is where the economic action is going to be over the next several decades. S. Koreans these days seem to actually hate the U.S., frankly.

[TigerLikesRooster]

Re #50

China has many additional problems. Wide regional differences, different ethnic groups, transition from communist command economy, the urge to push development much faster than these smaller countries. Being swept into globalist tide which can be quite destabilizing if not handled properly.

To think that PRC can pull what S. Korea or Taiwan pulled in equal or shorter period of time would be highly unrealistic. PRC is developing in the age of more unstable economic environment worldwide.

[formosaplastics]

Lee Kuan Yew himself has said that China is like "10 post-war Japans all developing and growing rich simultaneously." The economic impact that China is having and will have on Singapore and the rest of the world is not a figment of anyone's imagination but utterly real. Otherwise, other than China's growing economic power, there'd be no reason to even pay attention to China today. The only reason China is on anyone's radar screen is because China's economy is growing and being felt. If you really felt China's economy was a sham, you yourself wouldn't pay as much attention to it as you do because it would not be any kind of threat.

[TigerLikesRooster]

China is like "10 post-war Japans all developing and growing rich simultaneously."

If China can pull it off. My view is that China is likely to tear itself apart in its maddening headlong dash, disregarding all other precautions.

China started further behind either S. Korea or Japan and tried to go in much shorter time than these countries were able to do. This requires that everything goes right for China. In today's unstable environment, that is asking too much.

[formosaplastics]

The whole process of "globalization" itself is a China-centric process. Globalization means 1) find new sources of cheap products and 2) find new markets. China fits both bills. Globalization basically focuses on two countries, America and China, and their symbiotic relationship with respect to #1 and #2 above. The rest of the world, particularly the dysfunctional Third World republics that seem to require one IMF bailout after another, are almost not even involved. So this new era of globalization is not some "unstable" new situation that threatens China but rather an ideal situation that directly benefits China's development. After 20 short years of capitalism, China's already got the #2 economy in the world. It's the #1 market for both cell phone and fixed-line phones, but not only that, this year it became the #2 market for PC's ahead of Japan. While Japan, Korea, Taiwan, etc. all have seen their best economic days behind them, China has the next half-century to experience its "exponential" growth phase.

[formosaplastics]

If democracy really were the catalyst for economic development and releasing a country's potential, all of today's Third World republics would be outperforming China economically as we speak. But they're not. Those are the facts. At some point, you have to start acknowledging simple reality.

[TigerLikesRooster]

Re #56

Globalization means that things can change fast in either direction. When the going is good, the sky is the limit. If not, the pit you will fall into has no bottom.

During the boom time, it really appears that an economy grows exponentially indefinitely. American felt it that way for last several years until a year or so ago. But it stalls and frequently crashes, leaving bad aftertaste. If only good things occur to an economy, Japanese economy have already trounced U.S. by now. Or U.S. stock market is hitting above Dow 20,000 by now.

Remember that the upswing of a sine-curve looks always exponential but it goes down eventually. And grows again. Again my point is that China is poorly prepared for any downturns. More so than any other economies in E. Asia.

[formosaplastics]

If China is "poorly prepared" and has not been doing a good job so far, then do you think today's Third World republics are better prepared and have been doing a better job than China? Again, you have to start acknowledging the simple of realities.

[formosaplastics]

Your opinion is not enough. Facts matter. China has a track record over the past 20 years that beats Third World republics. In addition, China today is growing faster today than Japan, Korea, Taiwan, etc. too., which have plateaued.