Eric Margolis on China - thoughtful column

[baby_bear]

Ii really like this guy's style.

http://www.canoe.ca/NewsStand/Columnists/Toronto/Eric_Margolis/2004/10/03/653655.html

This snip doesn't do it justice, so read the whole thing if you are interested in the topic.

<snip>

China is making some efforts to restrain runaway growth, using both market and command techniques. But its banking system is weak and very fragile. Heavy U.S. pressure on China is growing to revalue its fixed-rate currency, whose under-valuation has created a huge trade surplus with America. But revaluation upwards could bring down China's entire rickety banking system and cause massive business bankruptcies.

China, in my view, is facing a dangerous financial bubble caused by too much frenzied investment that is outpacing both demand and good business sense. Chinese financial reporting is highly dodgy, concealing many explosive problems.

The biggest challenge facing China's government is to cool down runaway hyper-growth and produce a soft landing before this bubble bursts, an event that could shake the entire global economy and financial system.

</snip>

s_m

[DebJ]

1. I read somewhere that China owns a very very large majority

of the U.S. debt. Do you know if this is true?

[baby_bear]

3. That is my understanding as well, DebJ

There must be a "reliable source" where one can get this information, but I don't know what/where it is. Still, this is what I read in the mainstream media.

Scary, although the Republicans don't seem to mind. I think they are just trying to drive the middle class into oblivion.

s_m

[MissMarple]

2. What does this do to the stability of the world economy?

snip:
"Interestingly, China's ruling Communist Party has proven that communism can produce economic prosperity -- provided it ditches Marxist economics and adopts free-market policies. Total political control and party self-preservation, not economics, are the essence of the communist system."

Fendi handbags, Lancome cosmetics, busy Bentley dealerships, marble lined apartments, this sounds more like Rodeo Drive. I wonder what their have/have not graphs are like.

With authoritarianism and under regulated capitalism, interesting times seem to be on China's doorstep. And, since George said being dictator would make things a whole lot easier, we may become more like the Chinese instead of them becoming more like us.

[baby_bear]

4. Maybe they will look like what we used to be??

What I'm asking is, are the Chinese on their way to building a middle class? While we, via the Bush administration, destroy ours?

s_m

[MissMarple]

5. It's possible, and they may want to.

I heard a while back that workers' rights were being supported, although not at western standards. Factory workers were getting legal representation to obtain compensation for loss of limbs. The Chinese government was not interfering with this. I suppose that is a start. I don't know that much about the Chinese economy except in general terms, and the article talked of luxury goods, not so much about the middle class. It must be benefiting and growing, but unless they regulate and protect workers they might eventually lose more than they gain. We could all end up looking alike. That's grim.

I think with George&Co, losing the middle class here is an unintended consequence. I think many of them are believing their own propaganda with the rising tide, Laffer curve, tax cuts cure all ills ideology. I don't think they understand how their tax policies will undermine the middle class and grow the underclass.

What do you think?