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China - a bubble or new world leader


cd27

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The conventional wisdom is that China is the world power in waiting, and that it's workers are effectively slaves due to the low value of their currency and other factors, well it's starting to look like they're actually in a dangerous bubble that will collapse due to their mercantalist policies,

FT.com / Markets / Insight - China is heading for a Japan-style bubble

what do people think?
 

iartaoiseach

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The conventional wisdom is that China is the world power in waiting, and that it's workers are effectively slaves due to the low value of their currency and other factors, well it's starting to look like they're actually in a dangerous bubble that will collapse due to their mercantalist policies,

FT.com / Markets / Insight - China is heading for a Japan-style bubble

what do people think?
Check out the book 'the next hundred years' by George Friedman. very interesting bit on the chinese economy- it has the characteristics of all tiger economies built not on profitability but cashflow and basically a bubble. he predicts that they will follow japan and us into a bust. the most interesting thing he highlights is that in these countries its who rather than what you know that matters in business.
 

dunno

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There are a lot of small protests against local bosses seizing farms and other property. It it is a bubble that bursts, there will an outbreak of anger against the Communists.
 
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After the bubble bursts the Chinese economy will grow again.
China has just experienced the largest industrial expansion in all of human history lifting tens of millions of out of grinding poverty in the middle classes.
Having tasted consumerism, Chinese consumers are going to want more fueling further growth in the future.
Eventually the mantle of communism is going to be outgrown.
To have a freer economy it is inevitable that the Chinese political system will be forced to liberalise.
 

Chrisco

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The conventional wisdom is that China is the world power in waiting, and that it's workers are effectively slaves due to the low value of their currency and other factors, well it's starting to look like they're actually in a dangerous bubble that will collapse due to their mercantalist policies,

FT.com / Markets / Insight - China is heading for a Japan-style bubble

what do people think?
Where precisely is it held as conventional wisdom that Chinese workers are effectively slaves?
 

iartaoiseach

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There are a lot of small protests against local bosses seizing farms and other property. It it is a bubble that bursts, there will an outbreak of anger against the Communists.
this is most likely true. In the book referenced in my first post the author predicts the breakup of the PR into the provinces that existed before. even now there is a divide between the richer coastal areas and the very poor rural provinces. he also said that cities like Shanghai will end up in conflict with Beijing over regulation of business.
 

iartaoiseach

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After the bubble bursts the Chinese economy will grow again.
China has just experienced the largest industrial expansion in all of human history lifting tens of millions of out of grinding poverty in the middle classes.
Having tasted consumerism, Chinese consumers are going to want more fueling further growth in the future.
Eventually the mantle of communism is going to be outgrown.
To have a freer economy it is inevitable that the Chinese political system will be forced to liberalise.
the chinese economy like our own is very reliant on exports and if the demand dies for these exports then the bubble might not reinflate too quickly. also for all the middle class success stories there are many chinese that remain in grinding poverty with little hope of an improvement which could lead to conflict eventually.
 

Thac0man

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I saw a piece on Al Jezeera about this two days ago. It seems under direction from the government, banks are to lend to pretty much anyone who asks for money. Interesting to see how that works out come the due day for loans. It smacks a bit of sub-prime lending, though no one seems willing to mention that word. Ontop of that there is also massive government subvention of industry. Despite all this, domestic consumer confidence in China is still not great.
 

smitchy2

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They are still decades behind the Western world but have improved massively in recent years. Their GDP will continue to grow far above the world average.
Their labour is still very cheap so they will continue to generate investment from MNC’s and through the state.
 

Headwrecked

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Good thread

I read a good article last year (think it was Time) anyhows the angle was the threat of the one child policy in china and how this will have a massive impact as the country ages. There is simply not enough young people to replace the older generation - interesting point IMO
 
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cd27

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Where precisely is it held as conventional wisdom that Chinese workers are effectively slaves?
well their currency is held artificially low and there exist millions of low skilled workers keeping wages extremely low, so they get very little of the value of their production to save or spend, that is why there are major globabl trade imbalances, mercantilism I think
 

X-ray

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I visited china a few years ago, what you don't see on TV is that people are bursting with frustration. It is the most disgusting manifestation of capitalism I have ever experienced with absolutely no freedom. It will explode politically, it is not stable and will lead nothing. The USA constantly reinvents itself because basically it is a free society.

China is a right off, there are too many contradictions at the heart of it.
 

cd27

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They are still decades behind the Western world but have improved massively in recent years. Their GDP will continue to grow far above the world average.
Their labour is still very cheap so they will continue to generate investment from MNC’s and through the state.
yep, they need to become less dependent on exports and have their subjects start consuming more, to erase trade imbalances and build a stable country
 

atlantic

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Spot on this is where the problems lies ,when the population starts to age and live longer the shyte will hit the fan,not enough working to support the aged and infirm.
Good thread

I read a good article lsa tyear (think it was Time) anyhows the angle was the threat of the one child policy in china and how this will have a massive impact as the country ages and there is simply not enough young people to relace the older geeration - interesting point IMO
 

cactusflower

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I visited china a few years ago, what you don't see on TV is that people are bursting with frustration. It is the most disgusting manifestation of capitalism I have ever experienced with absolutely no freedom. It will explode politically, it is not stable and will lead nothing. The USA constantly reinvents itself because basically it is a free society.

China is a right off, there are too many contradictions at the heart of it.
There's a massive Chinese working class. Last year there was serious rioting in the industrial areas because of job losses. If they are looking at what's happening to workers in capitalist countries, they may not be too keen to follow the American model.
 

Chrisco

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so they get very little of the value of their production to save or spend
Source?

Chinese savings rates are among the highest in the world - normally around 1/3 of income, and that statistic is fairly static across all income levels.
 

jcdf

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China is already a world power of sorts.
In my opinion there is a bubble forming in China's economy. But there has been much real wealth created there as well. Technologically they have come leaps and bounds through industrialization. The mercantilist policies helped create this real wealth while at the same time laying the ground for a potential bubble. Despite this I think China is better off. If they had not gone down this road virtually all of them would still be peasants.

There are many who say that China has to liberalise in order to become a more stable place. I wonder if this is possible without violence. History has taught us that elites never freely relinquish power.

I do not agree with China's one child policy at all, it is evil! Similarly I do not think that an aging population is a problem. We are tremendously disrespectful of the old around here, who is to say an old person cannot work or carry their own weight. Just because some one comes of a certain age we immediately come to the conclusion that they are incapable handicapped dependents, this is a fallacy.
 

Hibernicus

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If China does not become a world power it is certainly going to be a massively strong eastern power which will bring it into conflict with Russia and India if things get nasty somewhere in the future.
 
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