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The BusinessWeek warns about the danger to the Chinese economy, but the magazine is mostly concerned with the United States. China, having extra capacity threatens to further overwhelm the US economy. I agree that many of the products of the Chinese stimulus, such as steel and automobiles, may not be validated in the market, because of already existing overcapacity. But the government does seem to be putting considerable money into upgrading public transportation and energy, albeit alongside even more coal burning and automobiles. However, China is moving much faster than the US in demanding fuel efficiency in its cars. On Mon, Dec 28, 2009 at 12:05:17PM -0500, S. Artesian wrote: > > Poses a risk to more than just the West, Michael. The expansion poses a > threat to China itself as profitability has declined dramatically in the > heavy, state supported industries that have received most of the stimulus. > > Fixed asset increases are "advantageous" [in capitalism] only to the degree > that the value of the fixed assets can be reproduced in expanded output. > With savings rate at such historically elevated levels in the US and EU, the > markets for the output are quite limited, and reproduction through the > domestic markets will require a radical transformation in the economy from > fixed asset investment to personal consumption. > > The growing asset bubble in Chinese commercial, and private real estate, is > not sustainable as a substitute for domestic reproduction of the capital > values-- as the recent history of the US and Europe has proven. > -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu michaelperelman.wordpress.com ________________________________________________ Send list submissions to: [email protected] Set your options at: http://lists.econ.utah.edu/mailman/options/marxism/archive%40mail-archive.com
