On Sun, Apr 19, 2009 at 8:04 PM, Marv Gandall <[email protected]> wrote: > b) The left-wing fallacy that China has simply become an export-driven > appendage of US capitalism. The article serves up the reminder that "China > is less dependent on exports than is commonly believed", and that it's > downturn, while exacerbated by the collapse in global trade, preceded it and > resulted from mainly domestic contradictions - notably, it's own home-grown > property bubble and subsequent state-induced bust. "If a collapse in > domestic demand led China’s economy down, it can also help lead it up > again", it concludes - largely independent of the course of developments in > the older capitalist economies.
Here's a dissenting view - by a very well-informed and intelligent observer. The gist of it is far from addressing the imbalances, the Chinese government seems determined to boost export-oriented infrastructure spending instead of domestic consumption. And yes, there are imbalances. While China's export dependence may be exaggerated, the 8% value-add share for exports may be misleading in the other direction i.e. fail to include "domestic spending" that is really little more than export subsidies. http://mpettis.com/2009/04/this-is-getting-tiresome-so-please-let’s-declare-the-crisis-over/ -------------------------------------------snip I guess it is hard to take forecasts seriously when they seem to fluctuate so directly with the most current numbers, but given the history of previous long crises – everyone of which had more than one temporary rebound, sometimes very sharp, on the way down – I would be reluctant to declare my optimism without a lot more data and a real sense that the underlying imbalances had truly been resolved. I am pretty sure this hasn’t happened yet. On the contrary, I would argue that the temporary “rebound” (which seems more to be a slowdown in the rate of contraction than a real rebound) has probably been caused by little more than policies aimed at temporarily exacerbating the imbalances, and as such they are unlikely to have a long term impact. In that light a friend sent me information reported in an April 15 article (“Henan: 1 trillion investment to create 650,000 jobs”) in the 21st Century Business Herald, a leading local business paper, that Henan province will be receiving RMB 1 trillion as part of the stimulus package and, according to the Henan Development and Reform Commission’s calculations, these key projects will only generate 650,000 jobs. Aside from the fact that the combined announced spending in the various provinces seems substantially to exceed the declared stimulus package, this really isn’t a lot of jobs for a province the size of Henan. More worryingly, I work out that if the money was just spent on workers to give them wages of RMB 3,000 a month (probably more than twice what migrant workers make and a decent salary for college graduates in Beijing), RMB 1 trillion could pay salaries for 650,000 workers for 43 years. This is not an efficient way to generate jobs. If these numbers are even vaguely correct it suggests that far more of the money is going into manufacturing and infrastructure investment than into job generation. This is not going to boost consumption by much in the short term and may boost production by at least as much, leaving unresolved the question of who is going to absorb the excess capacity if the US is not longer willing to play the role. -raghu. -- Never get into fights with ugly people, they have nothing to lose. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
