Hello Pogohere, you wanted my reaction on the following, and they are in CAPS, and then I will conclude generally on where the author had come from and wanted to go to.
Message 23106251
Friday, December 01, 2006
On the first day of Christmas My True Love gave to me a highly-coupled economy
Will China’s domestic demand play its proscribed role in the soft-landing “decoupling” scenario when/if American consumption demand falls along with GDP output in the next slowdown?
THE AUTHOR NEEDS TO DEFINE SOFT VS HARD LANDING, ELSE WE CAN NOT HOLD HIM ACCOUNTABLE LATER.
Much of the Chinese economic public relations image rests upon only seven of its cities whose combined population is 306 million souls*
RUBBISH. FOUR AREAS REFERRED ARE PROVINCES, MEANING VERY EXTREMELY LARGE AREAS THE SIZE OF THE LARGER OF EUROPEAN NATIONS
Six of these cities are highly urban and have grown thanks in large part to massive infrastructure and/or capital intensive investments. With nearly 40% of industry state-run that is perhaps not unexpected; and at least in urban centres it can be said that a form of consumption demand exists.
NONSENSE. IN THE AREAS REFERRED TO, STATE-OWNED ACCOUNTS FOR LESS THAN 10%, IF THAT, OF ENTERPRISES. THE REST ARE DOMESTIC COLLECTIVES (PRIVATIZED/ EX-STATE), PRIVATE, PUBLIC, SINO-OREIGN, ETC), AND ALL HIGHLY COMPETITIVE, ELSE BANKRUPTED LONG AGO, AS THE AREAS REFERRED TO ARE AHEAD OF THE REFORM CURVE.
Nonetheless, aggregate domestic distribution of goods has fallen since 1998; and the internal consumption market is, unsurprisingly, extremely fragmented.
NO IDEA WHAT THE AUTHOR MEANT, AND I DOUBT HE KNOWS
In rural China – 50% of the population - incomes are falling and are about 30% of the national average (which is $1,500 annually or $5,900 on a purchasing power parity basis). There are just too many farmers for what fertile land is available.
BALDERDASH. ELSE DIFFICULT TO EXPLAIN WHY LABOUR RATES IN CHINA ARE RISING, AND WHY INLAND DEVELOPMENT IS SPEEDING UP.
The famed export performance of China too has unexpected characteristics: 90% of it arises from the efforts of foreign owned firms. There is a striking lack of contribution from Chinese enterprises.
CRAP. WHO DOES THE AUTHOR THINK SUPPLIES THE FINAL EXPORTERS, OR ARE THE CLUB OF FINAL EXPORTERS SELF-SUFFICIENT IN SOME MORONIC WAY. ALSO, THE ISSUE IS EXPORT, NOT WHO EXPORTS. FURTHER, THE AGENDA-RICH DATA SOURCE IS SUSPECT!
Exhibit 1: Foreign share of Chinese exports, 1998 - 2006
Image courtesy of La Caixa bank
In sum, it is difficult not to conclude that the Chinese economy is dominated by urban and state-led investment projects (itself a function of huge domestic savings) of which its 7 largest cities have been principal beneficiaries.
THIS IS TRUE, AS IT WAS TRUE OF THE USA LATE 1800s and EARLY 1900s, EXCEPT FOR THE IGNORANT USE OF “CITIES” AGAIN – LIKE THEY GUY DOES NOT EVEN KNOW HIS GEOGRAPHY, NEVER MIND ECONOMICS
Preparations for the 2008 Olympics are a case in point; and the economic benefit from such investments has been ultimately mixed at best.
DRIVEL. BEIJING NEEDS REBUILDING, AND OLYMIPICS IS AS GOOD AS ANY EXCUSE FOR DOING JUST THAT
Half the nation is rural and desperately poor; there is a distinct dearth of significant homegrown companies;
DESPERATELY POOR BUT GETTING RICHER. MUST DEFINE DEARTH AS THE FDI COMPANIES ARE CHALLENGED AT EVERY STEP, EXPANDING IN GEOGRAPHY, AND MORE SUCCESSFULLY THAN NOT, BY THE DOMESTIC UPSTARTS PER MY ACTIVE WORK EXPERIENCE ON BEHALF OF THE FDI COMPANIES; AND I DO NOT CALL PROVINCES CITIES
and the export sector (with its own linkages back into China's savings rate) is in the hands of foreign companies.
RUBBISH. SAY WALMART CONTROLS CHINA’S EXPORT IN SOME SENSE, BUT IT IS ALL SOURCED FROM ENTITIES< OWNED BY WHOMEVER, ANSWERABLE TO CHINA INC, BAR NONE.
Coupling? They must be considering proposing.
China may be a great new market (and so it's been said for over 400 years) but investment–led internal demand hand in hand with dependence on exports has limits.
LOL. EVERYTHING HAS LIMITS. THE LIMIT OF EXPORT AND INFRASTRUCTURE LED-DEVELOPMENT IS JAPAN. THE LIMIT OF INFRASTRUCTURE AND CONSUMER LED DEVELOPMENT IS USA, AND BOTH TOOK LOTS OF TIME, AND CHINA IS PROGRESSING ALONG BOTH TIME LINES
The balance of probability says these will be exposed in the event of a significant US downturn.
ON THIS POINT, NO POINT TO ARGUE, AND THE AUTHOR HAS MADE A WHOLE LOT OF LOGICAL LEAPS. TIME WILL TELL WHETHER CHINA NEEDS LESS INFRASTRUCTURE OR IF USA CAN STAND LESS LIQUIDITY |
