Comments on: China and the world economy Thu, 21 Jul 2016 07:57:19 +0000 hourly 1 By: Sodash Wed, 29 Jul 2009 07:47:52 +0000 West needs to look at its base first, i think the fundamentals are shifting, boy now you learn!
I don’t see Chinese taking any interest in leading the world or trying to accomplish ! The eastern men are survivalist my partner! they can consume all the bull, yet we have some hope they learn! But I have my doubts if Yuan will be in my pockets!

By: wendy Wed, 29 Jul 2009 05:23:58 +0000 our China’s economy is based on the environment polution. sooner or later, we have to pay back for it. now Dalian city of liaoning province established a PX chemical project,which is only 20 km from city center. not soon later, all dalian citizens will suffer from the polluted air. and Dalian will not be a beatiful city of software develpment and tour, however, it will be a chemical and heavy industry city.

By: krishnamurthi ramachandran Tue, 28 Jul 2009 15:41:32 +0000 This is a good article.
Today,also read of 53 American financial institutions are very bad shape.
Now,it is the right occasion to ink with China for more trade and commerce ,and it will give more economic advantages to America,.
As a ordinary,with less insight,I welcome new,real steps by America and China for more economic,trade co-operation for future benefits.

By: Billy Tue, 28 Jul 2009 12:44:15 +0000 Hi, there,

The ongoing US-China strategic and economic dialog will help both countries understand each, this is 21 century, let us encourage solving differences through dialog, a more civilised way, in my view, China is dong a good job in making itself rich, its people wealthier and a more open society, US is also heading to the right direction by stopping the war in Middleast and turning its attention to its economy……

By: Peter H Tue, 28 Jul 2009 07:50:38 +0000 Kevin I think you might find that Gengis Khan and his army (who arguably also united China into more or less what it is today) did invade the west in the 13th century. By a curious twist of fate it take some of the pressure off the European armies not over-run by them by plowing through the Muslim armies in the east who had been on a mutually antagonistic series of campaigns against the west.

By: Greg Mon, 27 Jul 2009 18:22:22 +0000 This post, while certainly informative, is based far too much on fantasy and speculation.

First, while we are clearly in agreement that China may manipulate state owned companies, this manipulation reaches much deeper and is especially corrosive. We know that China exerts a far stronger grip on its press and bureaucracy, then other comparable economies. So with this secrecy and limits on information, how can we trust that China’s state published statistics are accurate?

Basically, the Party could claim any level of growth they want, it would be impossible for western observers and analysts to accurately verify. A recent Reuters article just stated that they obscure their actual debt holdings. So, really anything that emanates from the state must be considered circumspect at best.

The second major caveat to this discussion is the simmering socio-political undercurrents. In recent weeks there have been ethnic riots in the west, labor unrest in the north and east, and small scale demonstrations virtually throughout the country. Despite the impressive, yet likely fabricated growth rate, there appears to be many fault lines in the relationships between the people and state. While they are currently being contained, this could change very easily. The state may have exceptional control, but they realize that they cannot contain widespread unrest indefinitely. If a cohesive revolutionary front emerged, it would play havoc with China’s security and development.

We must remember, that despite the impressive numbers, and obvious economic improvements, most of the country resembles the 3rd world. The state exerts a penetrating and pervasive grip on almost all aspects of life. Human rights and environmental degradation are also huge, yet still easily overlooked, issues.

Clearly, China has a long way to go before it can be considered a developed economy. If anything, India has far more economic potential than China, and should be the country we most actively invest in. Until China comes to terms with its problems at home, it will never be a great power.

By: Kevin Mon, 27 Jul 2009 17:28:01 +0000 The fear most western countries have are due to lack of understanding of China. Keep in mind that China did not ever invade western countries using force when it was the largest economy for last 18 out of 20 centuries. and this is not china’s interest..

China does have its internal problems (given the size of the country and population), but not too much to worry about by the west.

By: Fulton Wilcox Mon, 27 Jul 2009 17:04:24 +0000 What most of the diagnoses and suggested cures ignore is that the worldwide financial crisis was demand driven and panic aborted rather than of “imbalances” in savings rates, balance of payments, etc. More ver, there has been a consistent tendency to fail to recognize, let alone address, the root problem, which is how to avoid “bubbles” without at the same time heading off healthy growth in the economy. Three propositions:

1. Consistent good demand news spawns demand “bubbles” which manufacture their own liquidity

As former Fed Chairman Greenspan has noted, the central banks have no means for preventing or shortstopping bubbles, apart from taking the entire economy into recession or keeping the economy unnessarily poor. In today’s environment of sophisticated communications, taking away the liquidity “punchbowl” is no small task, because demand can stimulate into existence many sorts of financing options. Also, bubbles in their early stages are hard to distinguish from healthy growth and indeed they contain within trhem a nugget of healthy growth (e.g., google was destined to prosper even though it was part of the .com “bubble”).

2. Diminishing good news spawns spotty weakness in bubble demand, which in turn stimulates fast-acting cuts and demand and bubble-bursting

If as occurred in 2007 received wisdom becomes that home prices will go up only 4% next year rather than the 10% or more of the prior two years, buyers move into wait and see mode or cancel transactions. As a result, home prices in fact go down, which in turn creates an accelerating panic and a crush at the exit doors.

In today’s world, the compression in the time it takes for people’s mood to shift means that the “bubble cycle” is both shorter and steeper.

3. Panic in turn causes customers and investors far away from the direct impact of the bubble to take defensive actions that impact not only day-to-day transaction volumes and prices, but institutional structures.

Very clearly, we were headed for an institutional collapse-stimulated depression, not because of pre-panic “imbalances” in the economy, but because of the sky is falling panic. Governmental action to preserve institutions, notably banks, helped curb panic. On the other hand, adding liquidity and guarantees so that banks would not collapse could save the instututions to fight a future day, but not create demand for loans. Banks can “push” money just as GM and Toyota can push cars, but customer demand rather than supplier inventory is king.

Nobody has responded to Alan Greenspan’s observation about the lack of ability to deal effectively to mitigate the impact of bubbles on either the up or down side. Assorted good housekeeping regulatory notions and “save more” rhetoric does not address the realities that drove the panic.

By: True_teller Mon, 27 Jul 2009 14:30:28 +0000 It is purely a fact that workers in developed west countries do not want to work as hard as these in the east. While at the same time, they need a lot of expenses like high wage, good benefits etc, Good example is comparing Japan’s car makers with Detroit’s big three. Thus problem is from west people but not any others.

By: Mike Mon, 27 Jul 2009 12:58:58 +0000 While the trend with China is true, it is NOT a function of real economics. It is purely due to the political choices made by US Presidents and Legislators. The only reason China has an economy at all is for the following fundamental reasons:

1) US Environmental policy that China is exempt from (especially in energy, mining, and the carbon tax)(The US Auto industry is a great example)
2) US Worker and Product Safety policy that China is exempt from
3) The strong arming of the US government on businesses to accept bad labor union agreements
4) Poor US fiscal policy and debt management (spendig more money than available and squashing private enterprise (the source of that revenue))

One day, when the people of the USA finally realize that private enterprise is far more important than government, China will no longer be a “financial” tiger. Until then, China will dominate the artificial world economy.