Thanks for that informed and well-reasoned reply.
You seem to be saying that China is so big, that it's huge inertia and mass will give it different dynamics than other developing nations. Sounds reasonable. But is it a qualitative difference, or just a quantitative difference?
Correct this if it seems wrong: A developing nation can grow its economy only by investing large amounts of capital. There are two broad sources of this capital: external and internal. Generating the capital internally, in a poor country, means keeping living standards very low, and enforcing strict discipline, for a couple of generations. This was Stalin's and Mao's method (starve the peasants while they build the dams and factories). Going back to that method is not an option today, for China. So, a growing economy means China has to continue to attract foreign capital (at the rate of U.S. $10s of billions/year). That foreign capital can only be attracted, in the necessary amounts, if there are foreign markets to sell into. The domestic market, the levels of domestic consumption, is still not nearly enough to justify foreign capital investment anywhere near the current levels. So, foreign consumers are crucial to the stability of the current Chinese government,(whose legitimacy now rests entirely on economic performance, now that Mao Thought has been discarded). Eventually, domestic consumption will be the main driver, but that point is still a number of years off.
You're seeing a vast pent-up demand in China today. Sure there is. There is also the same demand in, say, Sudan, but that demand will never be met (in either China or Sudan), unless the proper environment for capital is present. And my point was, that "proper environment" requires foreign consumers to keep buying.
Re: privatizing state-owned enterprises: Is it true that most of these, as in the Soviet Union, are net value-subtractors? That is, the raw materials they use, are worth more, in world markets, than the finished products are? Isn't this broadly true, with the exception of the defense industry, which won't be privatized? So......aside from accounting games, the actual value of these companies is........nothing. Therefore: all the value-added in the Chinese economy happens in the private sector, and the defense industry.
Other random thoughts:
Someone mentioned India as a possible rival to China. All the multinational empires created in the 1500-1919 period have dissolved into their constituent ethnic units. India is the only one left, and I don't see any hope of them resisting this powerful longterm historical trend. So, the best that can be hoped for, is that they have a peaceful divorce (like the Chechs and Slovaks), rather than a contested divorce (far, far more examples of this in the historical record). So, when the world becomes bi-polar again, the only candidate to ascend to superpower status beside the U.S., is China.
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In spite of recent gloom, the U.S. system remains the global standard everyone else is trying to imitate. That status was achieved because of the system's results: as the 2000 census results come out, we see: 25.1% Americans with college degrees , compared with 20.3% in the 1990 census......66.2% of American households owning their own homes......nearly one of five new houses exceeds 3,000 square feet.......More than 90 percent of households owned a car, van or truck...... |
