Is this writer (John Ross - a central leader of the Trotskyist International Marxist Group in Britain, later a key economic advisor to London mayor Ken Livingstone, and currently teacher at Renmin University in Beijing)serious?
> China is different. The bulk of borrowing, particularly by local government, is for investment, primarily in infrastructure. Borrowing therefore creates lasting assets – roads, subways, housing etc. Assets in turn create revenue streams directly, indirectly, or both. Direct revenues are fares, rents, tolls, etc. Indirect revenues are generated as infrastructure investment aids economic growth, yielding taxes, and has well-known effects in raising land values – land sales being one of Chinese local government's biggest sources of income. < Lots of the so-called lasting assets are empty buildings, indeed newly built empty towns and cities. At best it will take many years to find use for them, while they pile up maintenance and modernization costs. As for land values - this is productive development?! The writer also ignores the fact that corrupt officials and private wheeler-dealers siphon off a lot of the immediate profits on the so-called investments, stuffing a good part of the gain in foreign bank accounts and such, reducing the so-called multiplier effect on production for mass consumption in China. These flaws undermine the writer's argument that China will not suffer a financial collapse, although they do not prove that China will inevitably have one. The inevitability stems rather from the constant tremendous pressure to unfetter the accumulation of capital. The country will at some point fall into a real slump, whether or not it is marked by the burst of a big financial bubble. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
