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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (26138)	3/22/2005 11:56:21 AM
From: RealMuLan	Read Replies (1) \| Respond to of 116555

Thanks for the article, Mish. He has a good take on what is happening in China. When most of western media talks about China wants to slow down its economy, they fail to mention that China only wants to slow down in those over-heating sectors (like fixed asset, especially real estate sector, steel industry, as well as some other heavy industries). China does not intend to slow down in other sectors that grow normally or not enough (like service sector, bio-tech, agriculture, etc.). So one should not look at the general growth rate and say China has failed to slow down. They should look at sector by sector in order to tell whether the macro management has been a success or not. One thing China has learned from 1993 boom-bust cycle is that the economy in China is dynamic and complicated, and there is NO any one-size-fits-all approach. The macro management taken in 1993 was too simple and one-sided, so the economy had a hard landing (the official GDP growth rate was definitely overstated for those couple of years). This time China is trying to avoid that. As for RMB revalue, I think China is basically ready, but has to wait for the right moment, i.e. the hot money withdraws. And someone speculates that China wants to burn speculators so bad that they would never come back<g> >>always think stability when it comes to China -- whether the issue is economic or geopolitical. << This is only true under most circumstances. Taiwan (as well as the US and Japan) should not get a wrong message from that, since China will risk anything to keep its territory intact.

To: mishedlo who wrote (26138)	3/22/2005 1:13:51 PM
From: ild	Read Replies (3) \| Respond to of 116555

From Heinz after reading today's Roach and this post Message 21156081 i think China will suffer a bust...but that's no big deal (i.e., i doubt it'll bring down their government). when the Soviet Union collapsed, it was a communist country with no private property or private enterprise, completely run down (i've seen the Eastern Bloc countries with my own eyes)....absolutely not comparable to the China of today (not even remotely). all developing capitalist economies have busts now and then, often pretty bad ones. it's only natural. as for the arms race, it may be worth remembering that China is the creditor, and the US is the borrower these days. Reagan could 'afford' his military extravaganza since he produced the first mega-budget and trade deficits, and the disinflation debt build-up/boom was only just beginning. the situation now is quite different....the debt mountain is already at record highs, and the deflationary winter has begun. no more extravaganzas will be possible in coming years. also, if one looks closely, China is moving toward capitalism and freedom, while the West is moving inexorably toward tyranny. empires (and the US of today IS one) always end with a combination of military overstretch and huge foreign and domestic indebtedness becoming unsupportable. the bigger picture historical record speaks for itself in that regard. and China is the 'only enemy'? that's nonsense. only a bunch of neoconservative ideologues still thinks of China as an 'enemy'. China is an essential cog in the international division of labor....the West and China engage in 100ds of billions dollars worth of trade every year...truly funny 'enemies'. what can not be denied is that China's rise changes the supposed 'unipolarity' of the geopolitical situation....iow, the US won't be the 'only' superpower much longer. but so what...at least we'll get fewer unilateral wars based on lies that way. besides, if the European Union wanted to become a military superpower it could do so without breaking a sweat...but what for? military adventures (i.e., wars of choice, as opposed to defending oneself) never bring about the desired results anyway...they're always a huge waste of blood and treasure in the end. to engage in that nonsense just so one can look self-righteous is a peculiar American government disease...the rest of the world simply seems not interested. as for China's beef with Taiwan, this has been going on forever and a day. since the mainland is reforming, it is quite likely that one day Taiwan will join up in a loose federation. there's of course some danger due to Deng's 'one child' policiy, which has produced a surfeit of unmarried young men in China. they represent revolutionary potential, or failing that, cannon fodder for a war. by the way, i strongly dispute that Reagan's useless overspending on military hardware brought down the Soviets....if one has read Mises, well, it was known since the 1920's that communism would eventually collapse on account of its internal contradictions. an economy lacking free market prices to allocate resources efficiently is simply fated to end that way....regardless of the actions of others.