Jim Devine writes:
Jim O'Neill writes in the _Financial Times_ that:
With this move, overall gross domestic product growth will slow below 10
per
cent, but this decline will be led by exports and investment. The Chinese
consumer is going to keep on spending. In fact, judging by the ongoing
strength of retail sales, the Chinese shopper may already be spending
more
than his or her equivalent in the US.
so the fall in exports and investment will lead to falls in consumer
incomes but not in consumer spending? this means that Chinese
consumers will get deeper in debt and/or dip more deeply into savings.
is this possible, given Chinese financial institutions? how long can
Chinese consumers do this?
================================
Wages have reportedly been steadily rising in China even though labour
income as a share of it's dynamic GDP growth has been declining. Why would a
shift from export- to consumer-led growth, a shift which is already well
underway, necessarily be accompanied by a fall in consumer income even if
growth slows somewhat - as the Chinese authorities are hoping it will?
My understanding also is that the state is encouraging the development of
mortgage, credit card, and other forms of consumer debt which are found in
the US and other advanced capitalist countries, and, to this end, is
gradually opening up the banking sector to US and other Western and Japanese
banks, mutual funds, private equity firms, and venture capitalists. One of
the major objectives of the US in its "strategic economic dialogue" with the
Chinese, notably under former Goldman Sachs CEO Henry Paulson, has been to
further Wall Street penetration into the burgeoning Chinese economy and
financial markets.
An expanding US capitalism for a long time provided its workers with a
steadily rising standard of living, including - especially most recently -
through easy access to consumer credit. Why should Chinese economic
development be any different?
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