The conventional wisdom in Washington and in most of the rest of the world is that the roaring Chinese economy is going to pull the global economy out of recession and back into growth. It’s China’s turn, the theory goes, as American consumers — who propelled the last global boom with their borrowing and spending ways — have begun to tighten their belts and increase savings rates.
The Chinese, with their unbridled capitalistic expansion propelled by a system they still refer to as “socialism with Chinese characteristics,” are still thriving, though, with annual gross domestic product growth of 8.9 percent in the third quarter and a domestic consumer market just starting to flex its enormous muscles.
That’s prompted some cheerleading from U.S. officials, who want to see those Chinese consumers begin to pick up the slack in the global economy — a theme President Barack Obama and his delegation are certain to bring up during next week’s visit to China.
“Purchases of U.S. consumers cannot be as dominant a driver of growth as they have been in the past,” Treasury Secretary Timothy Geithner said during a trip to Beijing this spring. “In China, ... growth that is sustainable will require a very substantial shift from external to domestic demand, from an investment and export-intensive growth to growth led by consumption.”
That’s one vision of the future.
But there’s a growing group of market professionals who see a different picture altogether. These self-styled China bears take the less popular view: that the much-vaunted Chinese economic miracle is nothing but a paper dragon. In fact, they argue that the Chinese have dangerously overheated their economy, building malls, luxury stores and infrastructure for which there is almost no demand, and that the entire system is teetering toward collapse.
A Chinese collapse, of course, would have profound effects on the United States, limiting China’s ability to buy U.S. debt and provoking unknown political changes inside the Chinese regime.
The China bears could be dismissed as a bunch of cranks and grumps except for one member of the group: hedge fund investor Jim Chanos.
Chanos, a billionaire, is the founder of the investment firm Kynikos Associates and a famous short seller — an investor who scrutinizes companies looking for hidden flaws and then bets against those firms in the market.
His most famous call came in 2001, when Chanos was one of the first to figure out that the accounting numbers presented to the public by Enron were pure fiction. Chanos began contacting Wall Street investment houses that were touting Enron’s stock. “We were struck by how many of them conceded that there was no way to analyze Enron but that investing in Enron was, instead, a ‘trust me’ story,” Chanos told a congressional committee in 2002.
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Well doggie ,
looks like China won't be buying our abandoned strip malls
because they are about to have their own .
It is still a shock to me that our Buicks and Cadillacs or being made
in China and not Detroit , Michigan anylonger .
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China's rise has been overrated. The problems they face are huge.
It's all based on industry chasing after low wages and the Chinese executing Western designs, processes, and capturing their know-how by both legitamte and sinister means . There is no innovation coming out of China. Now that Obama and the Dems have declared war on the American economy and the entrepenuerial (or - in Obama worldview- the burgeoise) class, we're about to see just how dependent China is on the West and the innovation engine that's unique to the free peoples of Western Civilization.
If Obama and the Democrats are successful in killing the US economy, we may see a golden age of scientific and technological advancement drawing to a close. It was a phenomenal 100 years while it lasted!
The Bush era of unregulation, which turned our financial system into a casino, affected the whole world because of the global economy. When the greedy banksters' irresponsible gambles lost, US taxpayers had to bail them out, and we went into a severe recession. China's economy is based on selling her goods here in the US, and with 10% US unemployment, it is not surprising that many Chinese mall businesses are boarded up.
It is extremely important for Obama to be successful with his push for re-regulation to make sure this will never happen again. Unfortunately the same Republican culprits are fighting re-regulation so they can put us through this all over again as soon as we recover.
The Bush era of unregulation,
Take your political blinders off and back up a little further - to Clinton and campaign contributions and missile technology transfer - amongst a great many other things.
The worst Bush can be accused of is complacency and/or apathy , which are bad enough in themselves. A more responsible politcal class (Democrat and Republican) would have made it more attractive for US companies to keep their operations located here - instead of driving them them offshore with increasing taxation, regulations, and operating constraints.
instead of driving them them offshore with increasing taxation, regulations, and operating constraints.
Taxcuts and bootstraps. Solves every problem. Including gout.. if I read this board correctly.
But all the pol's have had a hand in the economic demise of our nation. The rubes in congress don't pack the gear that the wall street types have.... and they just do what they are told. I had hopes that this new administration would bring in a different type of talent.. but haven't seen it yet. Not until they bust up the 'too big to fail' banks and bring more economic oppty for everyone.
With no one in congress willing to stand out from their party, or their doners.... and construct real change, we all are going to continue to be hosed. The repubs don't want to enact real reforms, the dems bicker amongst themselves and can't get out of their own way.
If China is only a "paper dragon," but is a nation that actually makes physical products, then what is America? An air dragon? A hot air dragon?
The Bush era of unregulation,
Take your political blinders off
There is no denying that the Republicans have traditionally favored less regulation. McCain would have continued the madness which Obama is trying to change.
As Bob Herbert wrote in The New York Times last year (9/6/08), McCain's "economic guru" had been Phil Gramm a "demon for deregulation" along with Gramm's wife Wendy, who once led the presidential Task Force on Regulatory Relief in the Reagan administraton." Naturally Gramm and his wife were among the "big recipients of Enron's largesse. Phil Gramm was one of the lead architects of the breathtakingly irresponsible policies (No more restraints! No more regulation!) that led to the subprime mortgage meltdown and the current credit disaster. A corporate insider in the Bush-Cheney mold, Mr. Gramm was thought to be in line to serve as treasury secretary in a McCain administration" until he put his foot in his mouth and called us a "nation of whiners."
Meanwhile Obama is trying to get through the absolutely necessary regulatory changes, but the Republicans are fighting hard against this. Republicans love the status quo. ie the rich get disgustingly richer and the poor get pathetically poorer. Indeed the Republicans oppose health care reform because they envisage a two-tier society made up of the ultrarich, with their boutique health care programs, and the rest all poor enough to be on medicaid.
What's all this about China not being innovative? They invented the movable type printing press before Gutenberg, but their language was so complex that it wasn't practical so it didn't see a lot of use. They invented the compass, the crossbow, sericulture, belt drive, borehole drilling (did you know the deepest hole ever excavated by man before 1835 was done by the Chinese to extract salt brine?), a calendar as accurate as the Julian four centuries earlier (and another as accurate as the Gregorian three centuries earlier), cast iron, single and multistage rockets, negative numbers, porcelain, etc.
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