Tom,
>"Also someone, sooner or later, will ask the central government just how long they intend to continue paying-off certain well-connected parties in the export business. Pointed words, like hypocrite, are heard more loudly and more often. And then,...well, it's no way to run a country."<
Unless I've misunderstood your comment, I disagree.
IMHO it's exactly what China should be doing - and they learned it from us. It's no different from States or Cities offering incentives for a business to move there as we've seen so much of in the US in recent years. Their policies attract needed foreign investment and makes domestic exporters competitive against regional companies. The policies apply to the smallest as well as the largest companies.
By holding the value of the yuan, they keep a stable internal economy (80%). By offsetting the strong currency with tax breaks and incentives to the exporters, they let them compete against companies in other countries (that are getting other forms of 'corporate welfare'). The monies from the exports flows thru the economy and is taxed at other sources.
China is the only Asian country that's addressing the problems in a manner that minimizes the instability prevalent in others. They have studied the various economic methods and learned that high taxes inhibit growth. Japan, with very high taxes, tried to stimulate growth thru low interest rates and loose banking policies. South Korea was strongly influenced by Japan. It wasn't many years ago that we were being told the entire world would adopt Japan's business philosophy.
China is trying to follow the US example of a strong currency, low taxes, infrastructure spending, and 'corporate welfare'. It seems they are trying to follow the US example in many areas (judicial). IMO - They will do well if they continue this course but, unlike Russia, do it in an orderly and controlled manner.
JMHO,
Ron
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