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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: Bert who wrote (47112)	3/7/2004 7:47:34 PM
From: elmatador	Read Replies (2) of 74559

Bert, there's no master plan. The Chinese were facing Balkanization a la Yugoslavia at the end of the Cold War. The only way to keep the country in one piece, as the state-owned communist economic system was going to be destroyed, was to adapt. How to close down those old state-owned enterprises and not spirall down into Balkanization? Why not become the world's workshop? That's what they did. 86% produced there are production capacity imported in from factories closed everyhwere in the world from countries whose salaries can't compete with the Chinese's. The governing elite is still the same and is still there. It's working. Put the masses to work. Take the guy who drive the wheel barrow to drive a truck or a bus. Is there a problem? Just send in another bus load of rural people to solve it. You have to keep in mind that the guys in charge know only Stalinist type economy: throw in capital, labor and raw materials at the economy. The initial impulse from zero going up is amazing! Even Nikita Khrushchev was confident enough to say the COMECOM countries -that used the Stalinist-type economy- would bury the western capitalist countries. But we know how it ended. When China's impulse will end? I don't know, but I know for sure HOW it will end. Not like SEA 1997. China have learned from the 'pull of the carpet under the feet" of SEA economies in 1997 and won't let that happen with them. By accumulating high reserves they avoid the usual trick -see 1982 in LATAM- of a sudden capital pull out and let the competing economies starve to death. One thing is for sure: China will grow until it 'hits the head on the ceiling'. I tell you how this works: There is a lot of people in China, but how much % of the Chinese are capable of working in a modern economy? Maximum 30 million. ( I am using the % of Brazilians who do as a metric) I am not saying we should count every single engineer, accountant and manager out of school as able to work in a modern economy. These are given formal education. They've got the basics. I mean people who have the grasp on how the real world works economically speaking, and are able to act accordingly. Those are in short supply the world over. Once the economy of China have used up those 30 million, (How much is the employees turnover in China? It would be interesting to know) they stop shooting up since the human material are not there. Economic growth stalls. There will still be bus-load after bus-load of peasants being urbanized and brought in to solve problems, as there will be capital and raw materials, but the brains behind them to make them work right are no longer available. No matter how much capital raw materials and labor you throw at the economy it will no longer grow. That's how the grow will end. Forget about China or any country having a master plan. Governments are not that clever. They may have lots of plans but react based on the threats they feel close enough to topple them.

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