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China's New Chapter
China’s Reform Challenge
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  • Jim__L

    A few questions about China-

    Would stimulating industrial expansion by increasing domestic demand require greater raw material imports that could not be balanced by exports?

    How much of Siberia would the Chinese have to possess for the equation to change?

    How much of China’s recent prosperity have China’s elites successfully expatriated?

    • f1b0nacc1

      1) Yes….far greater
      2) All of it, but there are numerous key resources that Siberia doesn’t have that the Chinese would still need
      3) Far more of it than should leave anyone particularly comfortable

      • Jim__L

        Hm. A shift to a service economy makes a lot of sense for the Chinese, to keep delivering some form of economic growth. Is China really that resource-poor?

        • f1b0nacc1

          Yes and no….they have some very generous resource deposits (rare earths, for instance), but they are extremely short on others, most notably food and water. Moving away from an industrial focus would have some advantages for them, but given the way the country is structured (a reasonably modern/semi-modern coast, a hugely backward/agricultural interior), I don’t see how they do that without a LOT of trouble. There isn’t a big enough service economy in the world to provide jobs enough to move their backwards peasantry out of the 10th century, and while the coastal region (Manchuria isn’t strictly coastal, but throw them in too) would benefit from it, that would only exacerbate the gap.
          Worse still, the almost inconceivable level of corruption in China (seriously, it makes India look like a model of Good Governance) is crippling the country as it moves forward. The amount of economic surplus that is being siphoned off (either outright stolen or simply misallocated through incompetence, etc.) is hard to believe. Fixing this will be so painful that I don’t see any real chance that it could happen, especially since it would act to undermine the existing government’s authority. Quite frankly, part of this is cultural (if you haven’t had much experience doing business with the Chinese, good for you….the very concept of business ethics is utterly foreign to them) and I don’t see it changing anytime soon, but part of it is simply that (for China, or at least its leadership), corruption works as a control system and semi-formal method of allocating the goodies.

  • Jacksonian_Libertarian

    “A closer look at underlying indicators, however, including thermal power generation, railway freight volume, and output from the iron ore, plate glass, cement and steel industries released monthly by the National Bureau of Statistics paint a different picture, he said.

    Of some 60 major industrial products, nearly half saw output contract in the January to November period, while railway cargo volume fell 11.9% for all of last year, according to official sources.” Quote taken from the 4% link

    If we add in the $1+ Trillion in foreign currency that left China last year, which would take 5.55% off China’s likely bogus GDP number. Also not mentioned above is the 30%-40% fall in raw material imports, which indicates that the internal numbers like railway cargo volume might still be getting pencil whipped. And we can see that far from having an expanding economy, China is likely experiencing one of the steepest economic falls in recorded history. It’s wise to take the talk of an expanding Services sector with a huge grain of salt, as they provide absolutely no fundamental economic data like tax collections, to prove there’s any expansion in Services at all. When millions of people are losing their jobs, they are more likely to be cutting their use of services to save money, rather than expanding their use of services.

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