China vs. U.S. economics (investment, dollars, driver, debt)
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This is Paul Krugman's take. Seems to me that the big advantage of China is that they don't have to worry about their base.
China’s response so far has been fairly modest and measured, at least considering the situation. The U.S. has implemented or announced tariffs on virtually everything China sells here, with average tariff rates not seen in generations. The Chinese, by contrast, have yet to deploy anything like the full range of tools at their disposal to offset Trump’s actions and hurt his political base.
What they’ve been saying through their actions, in effect, is: “You think you can bully us. But you can’t. We, on the other hand, can ruin your farmers and crash your stock market. Do you want to reconsider?”
I have to say it. While I think Trump's trade war is a stupid and unforced error, you can be pretty sure that Krugman is wrong.
Nobel Prize or not, Krugman has amassed a breathtaking number of incredibly wrong predictions over the years. He predicted twenty years ago that the internet would have no more impact on the economy than the fax machine. He egged on the housing bubble and was totally blindsided by the resulting near-collapse of the banking system when lots of us were getting out a year earlier. He predicted that fracking would have zero effect on the United State's dependency on oil imports. He predicted that the stock market would tank when Trump was elected. And the list goes on.
In other words, Paul Krugman long ago traded in his economics creds to be a bloviating hack in the Op-Ed section of the New York Times. And I say that as someone who wouldn't vote for Trump with a gun to my head.
I have zero idea where this all ends up in terms of the trade war. However, anyone who blithely thinks the Chinese are sitting pretty economically is kind of an idiot. China is an export economy while the US is not. China's is hemorrhaging its working age population. As of 2014, China has begun seeing the inevitable effects of One Couple One Child, and is expected to lose 250,000,000 workers by 2050, the same time period that the United States is slated to gain another 50,000,000. China's total debt is roughly 300% its GDP. By comparison the US ratio is roughly 100%. Not great, but certainly not bad in comparison. China cooks its economic books to the point that no serious economist takes their numbers at face value. Note, for example, the disconnect between their stated GDP growth and their grown in electrical production. China's currency valuation is sinking. Capital flight continues despite the country's latest currency controls. And God help China if they try to pull a Tienanmen Square in Hong Kong.
I guess what I'm saying is that Krugman is not a trustworthy voice. He's a guy who long ago decided it was more fun to be a pundit than a student of the economic system. I wouldn't trust his predictions as far as I can throw my car.
I have to say it. ... sure that Krugman is wrong ... Krugman is not a trustworthy voice .
I guess what I'm saying is that . He's a guy who long ago decided it was more fun to be a pundit than a student of the economic system. I wouldn't trust his predictions as far as I can throw my car.
And God help China if they try to pull a Tienanmen Square in Hong Kong
You certainly right about Krugman. He's a journalist.
A charlatan, like all mass media people and staged politicians.
US farmers do not need China, we do not need to feed corn and soybean to Chinese pigs. There are a lot more creative and healthy things we can do with our farmland and we can afford 30 years of subsidies to restructure it.
Besides a few charlatan politicians and mass media people, no one is going to care much if the Chinese pull another Tienanmen Square in Hong Kong, except as good propaganda fuel, better than ethanol.
I am more concerned that the Chinese could throw a million-man army at somebody, like US or some indebted South American country, and not bat an eyelash over casualties.
I stopped reading right there. Krugman is a has-been left-wing partisan hack who attacks all viewpoints to the right of his own by rote. He hasn't done any significant work in economics in over 20 years. He's pretty much like the high school football star who, 20 years later, still shows up in his letterman jacket at all the home football games to relive that game-winning pass, even though there are fewer and fewer people who remember who he once was.
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Besides a few charlatan politicians and mass media people, no one is going to care much if the Chinese pull another Tienanmen Square in Hong Kong, except as good propaganda fuel, better than ethanol.
I am more concerned that the Chinese could throw a million-man army at somebody, like US or some indebted South American country, and not bat an eyelash over casualties.
Hong Kong has immense wealth based on the fact that it is relatively free enclave in China where property rights matter. A Chinese crackdown would spur enormous capital flight and have incredible repercussions on its own economy.
As far as a million-man army is concerned, no. That's tinfoil hat kind of stuff.
Hong Kong has immense wealth based on the fact that it is relatively free enclave in China where property rights matter. A Chinese crackdown would spur enormous capital flight and have incredible repercussions on its own economy.
And to the benefit of others' economies.
Just for example, do you think Miami really cries for Argentina?
As far as a million-man army is concerned, no. That's tinfoil hat kind of stuff.[/quote]
Useful propaganda for military spending kind of stuff.
I certainly wouldn't want to live as a Chinese citizen, and have no admiration for their style of rule, but I can't believe how clueless the average American is, when it comes to comprehending exactly how advanced China is, and how much further ahead they are in many, many ways.
It's amazing what can be accomplished when human rights and environmental issues aren't a consideration. The USA and China are not playing on a level field. If the USA were to roll back our worker's rights and environmental regulations to Chinese levels, the balance of power would be very different, but the outrage in the USA would be deafening. We can't have it all - high wages, worker protections, stricter environmental regulations, etc, and sell goods as cheaply as China does.
It's amazing what can be accomplished when human rights and environmental issues aren't a consideration. The USA and China are not playing on a level field. If the USA were to roll back our worker's rights and environmental regulations to Chinese levels, the balance of power would be very different, but the outrage in the USA would be deafening. We can't have it all - high wages, worker protections, stricter environmental regulations, etc, and sell goods as cheaply as China does.
Exactly. Fact is though, China is advancing their economy whereas the USA already is advanced. As their central command steers their economy more towards their people my bet is that one of their next big things will be national HC reforms and promotion. And other social and workplace supports, along with environmental clean ups. Their soon to be first world middle class will demand it!
About the only argument that can be made in China's favor vs Japan is that China has 10x the population, but that ignores that about 400 million Chinese are inland peasants who are not plugged into the global economy. This was once seen as a bottomless reservoir of labor but the Chinese workforce has already started to shrink due to sub-replacement birth rates since the early 1980s. After the financial bubble pops in China, this inland population will be more of a liability than an asset. It's inevitable that popular demands for social insurance will rise after growth cools or stops, and that will further hobble China. China will get old before it gets rich.
Also don't count out the lassitude that will develop among younger Chinese who become disillusioned with the rat race, especially as winning becomes harder and the debts of the go-go years come due. China will be pretty similar to Japan in this respect, except with more corruption and less political flexibility.
Contrast this with the US, which has seen steady population growth alone among developed countries (all immigration, but in the US immigrants assimilate) and still has low population density and thus more room to grow before density acts as a psychological brake. (Developed country people don't like being stacked like sardines in a can and forgo children when density is too high.)
China saw its huge population as an issue. They wanted to decrease it because you do not have means to support it. If their economy increases, and their population decreases, the two should come to an equilibrium of sorts.
Or what they can always do is bring in foreign workers while repealing their population controls, and lower minimum age for child labor, and in a decade be right back where they want to be
Quote:
Originally Posted by MinivanDriver
I have zero idea where this all ends up in terms of the trade war. However, anyone who blithely thinks the Chinese are sitting pretty economically is kind of an idiot. China is an export economy while the US is not. China's is hemorrhaging its working age population. As of 2014, China has begun seeing the inevitable effects of One Couple One Child, and is expected to lose 250,000,000 workers by 2050, the same time period that the United States is slated to gain another 50,000,000. China's total debt is roughly 300% its GDP. By comparison the US ratio is roughly 100%. Not great, but certainly not bad in comparison. China cooks its economic books to the point that no serious economist takes their numbers at face value. Note, for example, the disconnect between their stated GDP growth and their grown in electrical production. China's currency valuation is sinking. Capital flight continues despite the country's latest currency controls. And God help China if they try to pull a Tienanmen Square in Hong Kong.
US is only gaining due to illegal immigration, or immigration. And country seems quite divided about that. China can also do the same thing. They already begun importing East Africans, and kidnapping women from poorer Southeast Asian nations for the men to marry.
Any debt that China owes to itself, they can literally just write off or print more to cover. They are a dictatorship, so can just do what Russia has done.
Quote:
Originally Posted by MinivanDriver
Hong Kong has immense wealth based on the fact that it is relatively free enclave in China where property rights matter. A Chinese crackdown would spur enormous capital flight and have incredible repercussions on its own economy.
Only a handful of individuals have the wealth. The wealth is tied to the RE/location. Surely the wealthy can send their money overseas, but they cannot move the buildings, and the location. Plus I sure they already do plenty of foreign investments.
Plus with Canton right next door, HK is no longer really needed. If HK wealth is truly dependent on some kind of lax rulesets, the Chinese can easily implement that themselves anywhere, anyhow, anytime.
US farmers do not need China, we do not need to feed corn and soybean to Chinese pigs. There are a lot more creative and healthy things we can do with our farmland and we can afford 30 years of subsidies to restructure it.
Only a handful of individuals have the wealth. The wealth is tied to the RE/location. Surely the wealthy can send their money overseas, but they cannot move the buildings, and the location. Plus I sure they already do plenty of foreign investments.
Plus with Canton right next door, HK is no longer really needed. If HK wealth is truly dependent on some kind of lax rulesets, the Chinese can easily implement that themselves anywhere, anyhow, anytime.
80% of all foreign investment dollars into China flow through Hong Kong. Anyone who claims that HK is no longer needed is, well, never mind.
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