China's Economy going down

[Dari]

Ironically, things could've been much better for China if the pro-democracy movement had never occured back in 1989. Because of that, the "country boys" were ousted from power and the "city boys" took over. The "country boys" were who started the reforms that China is enjoying now and their primary focus was on the countryside, where the vast majority of Chinese dwell. After 1989 China turned its attention to the cities. Because of that, there have been many remarks regarding the "tipping point" where massive social unrest could occur if the economy is not growing fast enough. Many put it at 6%-7% GDP growth.

The massive stimulus package the government announced a couple of months ago could help it pass that tipping point but considering the endemic amount of graft in that country, it may just pass it if Western economies don't get better fast.

China is a huge country with many minorities so it'll be interesting to see if public debt (currently at 21% of GDP) isn't used to bribe the population into remaining calm.

 

[Jhhnn]

Originally posted by: JS80

Originally posted by: Jhhnn
Unlike the US, China is a nation of savers. Domestic demand for goods and services remains quite low relative to income from trade- they produce more than they consume. Until very recently, there was no consumer credit in China, for example. They save up to buy anything major, at all. And despite huge govt expenditures on infrastructure, their cash reserves are growing...

Govt efforts to stimulate consumer spending in China have met with limited success- until recently, economic conditions in China over the last 100 years were like the great depression in the rest of the world, so it's understandable that they have a cultural affinity for saving when they can, for being frugal, and for having actual assets... Americans who lived the depression were a lot like that, too...

If the Chinese govt started giving away money, most of the recipients would save it... even people who are quite poor by our standards...

Whether you know it or not, you pretty much just explained to us why China will not ever catch up to other first world countries.

I agree with LK that China will likely implode in the next decade or two. And if the US and Europe does contract by 5% I would say it's highly likely China implodes in the next decade.

I'm sorry, but that makes no sense at all, particularly w/o some line of reasoning to back up the assertions...

 

[JS80]

Originally posted by: Jhhnn

Originally posted by: JS80

Originally posted by: Jhhnn
Unlike the US, China is a nation of savers. Domestic demand for goods and services remains quite low relative to income from trade- they produce more than they consume. Until very recently, there was no consumer credit in China, for example. They save up to buy anything major, at all. And despite huge govt expenditures on infrastructure, their cash reserves are growing...

Govt efforts to stimulate consumer spending in China have met with limited success- until recently, economic conditions in China over the last 100 years were like the great depression in the rest of the world, so it's understandable that they have a cultural affinity for saving when they can, for being frugal, and for having actual assets... Americans who lived the depression were a lot like that, too...

If the Chinese govt started giving away money, most of the recipients would save it... even people who are quite poor by our standards...

Whether you know it or not, you pretty much just explained to us why China will not ever catch up to other first world countries.

I agree with LK that China will likely implode in the next decade or two. And if the US and Europe does contract by 5% I would say it's highly likely China implodes in the next decade.

I'm sorry, but that makes no sense at all, particularly w/o some line of reasoning to back up the assertions...

here i'm going to reword what you said:

Chinese are a bunch of cheap asses. They won't buy shit and since they don't really want to buy shit, they don't need to make much money. If they do want to buy something they buy cash because they are so afraid of levering up even a little bit. And even though the government is pumping cash all they do is hoard their money and not spend it.

Even if the govt gave money away, these cheap asses would rather put it under their mattress.


So how in the world will a cheap people who don't spend money ever grow their economy to first world status?

 

[Jhhnn]

Kinda shifting the goalposts, JS80. First you offer that they'll collapse in the next decade or two, offering no rationale for that, but now it's that they won't achieve first world status because they're cheap.

Whatever line of reasoning linking those statements exists only in your mind, at least so far...

They'll collapse because they're frugal and they save? And they'll never achieve first world status for the same reason?

Quite to the contrary on the first score- they'll survive tough times because they'll have resources rather than a credit rating and insupportable overhead.

And as for the second contention, so what? Their goals, atm, are much more modest. Prior to the Communist takeover, much of the population was starving, and they had unbelievably corrupt governments for many decades prior. They'd been devastated by the Japanese and by western mercantilism. The whole country was an unbelievable mess. Rural China is still incredibly poor, not because they save money, but because they don't have any. They've endured privations beyond our imagination. When times are relatively good, they save because history has taught them it's the only way they can survive when things get tough.

If their govt can provide stability for a long enough period of time, and if a bit of the prosperity of the urban centers can trickle out to the countryside, then the people will have more faith in the future, and their long ingrained cultural headset will start to change. They were on the wrong end of wealth extraction processes for a very long time, and now they're turning that around, building wealth by producing more than they consume.

There have been times when the US did the same thing- produced more than we consumed, and is essentially how wealth is created. Being blessed with enormous virgin resources didn't hurt, either.