China
Posted: Sun Aug 14, 2011 5:48 am
People are taking a long, hard look at China now like they did for Japan in the 80s. While they are riding high now, China does have some deep and basic issues.
One is that they helped pull all of our fat out of the fire in 2008 by the central government throwing money at their economy to grow it and keep people working. That also kept demand up for all kinds of basic things like copper, iron, etc. which come from other countries and boosted the world economy. Now I am seeing articles that the chickens are coming home to roost. A lot of that money went for showy uneconomic things, incompetent management, sleight of hand funding, etc. Supposedly the banking system now has to work thru all kinds of bad loans and there is real doubt if China can come to the rescue if we have a double dip recession. Hmm. Sound like a familiar story in other countries?
They will bump up against a ceiling (per capita income) for closed societies. Apparantly is you rank world economies by per capita income, there seems to be an upper limit thru which a country cannot pass without all the messiness of some degree of an open press, transparent government, etc.
The bottomless pool of Chinese willing to work for next to nothing is not bottomless. In fact, it is nearing an end. The unavoidable follow on is higher wages and that means it becomes increasingly difficult for them to compete strictly on prices. There is a lot of slack in the system for improvements in efficiency, but that means change which is always difficult for a lot of people.
They also are screwed by their demographics after decades of the one child rule. They are riding high now because the ratio of working people to dependents (children, old farts, etc) is very high. However, with the one child rule the number of children growing to adulthood is proportionally way too small for the economy. By 2050 China will have a much higher ratio of old folks to young workers than Japan does. The summary statement of the article is that China will get old before it gets rich.
One solution would be an immigration policy that meets their economy's needs. Somehow I imagine them as like the Japanese - a closed society. Does anybody in the forum have any experience in China? I am curious if they can absorb people from other countries oir if they have a China for the Chinese mentality?
One is that they helped pull all of our fat out of the fire in 2008 by the central government throwing money at their economy to grow it and keep people working. That also kept demand up for all kinds of basic things like copper, iron, etc. which come from other countries and boosted the world economy. Now I am seeing articles that the chickens are coming home to roost. A lot of that money went for showy uneconomic things, incompetent management, sleight of hand funding, etc. Supposedly the banking system now has to work thru all kinds of bad loans and there is real doubt if China can come to the rescue if we have a double dip recession. Hmm. Sound like a familiar story in other countries?
They will bump up against a ceiling (per capita income) for closed societies. Apparantly is you rank world economies by per capita income, there seems to be an upper limit thru which a country cannot pass without all the messiness of some degree of an open press, transparent government, etc.
The bottomless pool of Chinese willing to work for next to nothing is not bottomless. In fact, it is nearing an end. The unavoidable follow on is higher wages and that means it becomes increasingly difficult for them to compete strictly on prices. There is a lot of slack in the system for improvements in efficiency, but that means change which is always difficult for a lot of people.
They also are screwed by their demographics after decades of the one child rule. They are riding high now because the ratio of working people to dependents (children, old farts, etc) is very high. However, with the one child rule the number of children growing to adulthood is proportionally way too small for the economy. By 2050 China will have a much higher ratio of old folks to young workers than Japan does. The summary statement of the article is that China will get old before it gets rich.
One solution would be an immigration policy that meets their economy's needs. Somehow I imagine them as like the Japanese - a closed society. Does anybody in the forum have any experience in China? I am curious if they can absorb people from other countries oir if they have a China for the Chinese mentality?
realpisse