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Strategies & Market Trends : World Outlook -- Ignore unavailable to you. Want to Upgrade?

To: Don Green who wrote (1315)	2/12/2003 6:53:52 PM
From: RealMuLan	Read Replies (1) \| Respond to of 50909

>>...known as factor price equalisation (everyone is equal and therefore all wages across the world should also be equal).<< I do not know about the theory, but I think the Globalization process does help this claim to become a reality. And since so many people, including a lot of US congress men believe in Globalization, so by extension they help to spread the theory which they may not even agree upon. >>Essentially what he said was that China's huge workforce is growing ever more productive but its wages remain low and this would continue to give China an edge in clobbering competitors. << I already said I disagree with this. Because the wage in big cities are raising, for those who have jobs of course. As a matter of fact, the wage level in Guangdong, Fujian provinces is already higher than in some Southeastern Asian countries, like Indonesia, Thailand… However, since China has a vast population, and a lot of inner provinces still have millions of surplus cheap labor, so a lot of business which want to take advantage of the cheap labor are now moving away from coastal cities and into inner provinces. >>But the mainland has no such thing. Most of the money its banks raise from the public is invested into a growing fiscal deficit, construction of public works of questionable usefulness and the propping up of loss-making state enterprises that should have long been shut down. A good proportion of it is also simply "misplaced". There is not much left over for financing of private sector industrial enterprise. << Empty, he will have to give more concrete examples to prop this claim. I can also say the same opposite things, like useful investment in telecommunication, all kinds of infrastructure investment which is needed badly for further economic development down the road. And he forgot to mention that a lot of these raising funds are just sitting in the bank. Yesterday I read something like 2 trillion cash is sitting in the bank now, ineffective - Yes, but not wasted like he claimed. >>Thus most of the required money comes from elsewhere, largely Hong Kong, Taiwan and other overseas Chinese sources who naturally invoke the golden law for the use of it - him what has the gold makes the rules. It means they take ownership and control, pay little tax in the mainland and dodge what taxes they still may owe by booking their profits elsewhere. That was how golfer Tiger Woods became Shenzhen's biggest taxpayer two years ago from just one day's proceeds of touring the links with local status seekers. The status seekers made their money by keeping quiet about where they made it. << I agree. But things start to change now. Well, personally, I think China will become one of top 3 players (US, EU) in the world economy 10-15 years from now (I think "dominate" is a too strong word that I do not like it). And 20-25 years from now, China may even become Number 1 players in the world economy (yes surpass the US GDP is not impossible), just as the vast number of US baby boomers retire with a near-bankrupt Social Security and Medicare system.