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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: Neocon who wrote (125677)	3/7/2004 9:57:50 PM
From: Bilow	Read Replies (2) \| Respond to of 281500

Hi Neocon; Re: "This is the sort of thing one expects to find in an overheated economy: that the various sectors cannot keep pace and that there is a strong whiff of speculation and an emerging bubble due to poorly planned investment." China is a Communist nation. While there is some speculation there, it's mostly centered in a few very wealthy areas like Hong Kong. The vast majority of the population has little or no speculation going on. This is in deep contrast to the situation in the US in the 1920s or 1990s, where most of the population was absorbed in stock market speculation. The Chinese economy is not largely driven by consumer purchases paid for by speculation profits, so any excess in speculation will have little effect on their economy. Instead, as the article makes very clear, the problems are in getting imported goods into China. This reminds me of the situation that obtained for decades in Japan. That it is difficult to import goods into China now should hardly be a surprise. It's the usual mercantile government policy in action. Re: "I fear that it will turn out as it did with the Asian Tigers ..." No, this is not your fear, it is your hope, your fantasy. The Asian Tigers collapsed way back in 1996, and China's close proximity, and developing status should have gotten them embroiled. That it didn't is probably due to the absence of speculation in China. They're a COMMUNIST country, for God's sake. The Chinese economy has already gone through at least one, modern, overheating period (which included double digit inflation, a factor not yet seen in China), around 1993-1994. This was just a temporary cycle in a trend that continues upward. Since then, their per capita GDP has doubled. According to PPP, China is second only to the US in the size of its economy, and it's clear that their total GDP will exceed that of every nation but Japan and the US within a few years. China does have problems in infrastructure, but they're taking better than 1/3 the world's production in cement fixing those problems. One would not expect the Chinese to always be able to keep up with their growth. The problems will cut their growth to an amount capable of matching their infrastructure growth, but they keep accelerating the rate at which they improve their infrastructure. For example, look at how fast they're increasing electricity production the last few years. -- Carl