China's Economy 40% Smaller
Dec 10 2007 00:05
The New York Times describes how the world bank has re-evaluated China's economy's size to be $6 trillion dollars rather than $10 trillion dollars. This re-evaluation comes because previous figures used a 1980 estimate of local prices and a current survey has shown that prices now, naturally, higher.
This is important for many reasons. Certainly, we should note that the growth of China's internal economy has been rife with corruption and this corruption has prevented the economy from growing as much as the West imagined. The idea that China could subsist without its export sector seems implausible and it seems unlikely the Chinese government would take steps that would throw the Western World into recession.
At the same time, this throws China's internal financial problems into greater relief. In The Coming China Crash, this bourgeois "bear" economist describes the vast extent of China's bankrupt state enterprises and state-sponsored speculative ventures. The Chinese state has more than a trillion dollars, the largest chunk of cash in the world, but it is nowhere near sufficient to solve the problems of the Chinese economy, much less those of the entire unbalanced capitalist world economy.
And there are more implications. But that's enough for now.
Red
Dec 10 2007 09:40
#2
fixed.
Dec 10 2007 11:06
#3
RedHughs wrote:
The Chinese state has more than a trillion dollars, the largest chunk of cash in the world
Oooh, it should print it on a note, like in the Simpsons.
Dec 11 2007 22:36
#4
Hmm,
I don't know why I can't edit my original post even when I'm logged in.
Anyway, the second linked article has been moved to:
http://prudentbear.com/index.php/archive_menu?art_id=4854
Perhaps my language discouraged comments but I think this re-evaluation of China's economy is quite important. The argument in the capitalist press is that the expansion of the third world will prevent the USA from going into recession. It seems likely that instead, world production is still focused on satisfying US and European demand and that a slackening of this could provoke an intense depression. Of course, I suspect the US Fed will attempt a last, heroic round of reflation and "bubble blowing". Thus the most extreme impact of financial collapse might not be seen for another couple of years.
Red
Dec 12 2007 19:26
#5
*shrugs* We all knew that the Chinese economy is headed for the shitter. They rely on a massive reserve army of labor. That reserve army is shrinking drastically as folks from the mao boom enter old people homes. The remaining generation is much smaller and able to garner much higher wages. Much of that one child policy era generation will be dead from respiratory illnesses anyway. The air quality is literally to die for and everyone in china smokes like a chimney. So yeah, time to move the bottom somewhere else...probably India.
Dec 12 2007 20:25
#6
Quote:
They rely on a massive reserve army of labor. That reserve army is shrinking drastically
not really, there's still a good half a billion or so looking ahead that have yet to shift from agricultural to urban employment
your probably right about the bottom being moved elsewhere but that doesn't equate to being a negative thing for the chinese economy, their moving up the 'quality' chain which means instead of cheap clothes it's cheap satellites, technological & military equipment and all manner of other things
Dec 13 2007 00:06
#7
they are already moving industries from china to africa for instance...
Dec 13 2007 09:48
#8
all part of their move 'up the quality chain'
the massive trade surpluses that they've accumulated over the last few decades combined with the ongoing structural weakness of the dollar and a reluctance to continue being banker to US consumer spending has resulted in a redirection away from holding their surpluses in low yielding american bonds towards long term strategic investments abroad in all kinds of industries and all kinds of countries - chinese finance firms have provided massive amounts of financing to european & american banks in the last few months alone for example, likewise for energy ventures in africa and an attempted take over of an amercian oil company
regardless what the asbolute size of their economy is, it's been growing at roughly 10% a year for the last 30 odd years, and with a massive reserve of labour still due to make the transistion from rural to urban it looks set to continue
Your links are fucked up.