DescentBB

As of Thursday, there should be no remaining doubts as to the tectonic shift in the global economy -- the world's largest and most profitable bank is Chinese.

While banks in North America and Europe are still counting massive credit crunch losses, the Industrial and Commercial Bank of China has surged ahead of its international competitors thanks to a booming domestic economy that has dramatically boosted profits.

The country's overall growth cooled slightly in the first half of 2008, after 41/2 years of double-digit increases. But China is still expected to produce growth of around nine per cent to 10 per cent, a rate that would be the envy of many other nations.

http://www.canada.com/vancouversun/news ... 7bc706a41f

Faster, stronger, higher indeed.
And doesn't China own a large portion of the U.S. debt?

A traditional defence of the national debt is that Americans \"owe the debt to ourselves\", but that is increasingly not true. The US debt in the hands of foreign governments is 25% of the total, virtually double the 1988 figure of 13%. Despite the declining willingness of foreign investors to continue investing in US-dollar–denominated instruments as the US Dollar has fallen in 2007, the U.S. Treasury statistics indicate that, at the end of 2006, foreigners held 44% of federal debt held by the public.[30] About 66% of that 44% was held by the central banks of other countries, in particular the central banks of Japan and China. In total, lenders from Japan and China held 47% of the foreign-owned debt.

So maybe only 10-15% of what the U.S. owes to foreign
lenders is Chinese.
Could be worse.
Probably will get worse.

So is it Capitalism and Democracy that make the world go round or a Managed Economy and whatever you call the Chinese government (I'm not sure Communist has really applied since after The Great Leap Forward was such a disaster)

And your point is?

Let me guess, just another vailed attack on the US out of left field?

It's not an attack it is a comment. You know as in Ethics and Commentary
Capitalism is generally accepted as the best wealth generating system and China only really began growth when they started increasing the amount of capitalism and free enterprise in the mix that is their economy. Similarly, Democracy is considered a key ingredient in a successful economy as it allows a more free economy to exist as opposed to dictatorial or autocratic rule which tend to interfere with an economy, especially a socialistic autocracy (or whatever they are) such as China.
Yet here China is going against conventional economic wisdom and doing it at a record pace of growth while nations such as the U.S, Canada and most of Europe stagger on with much less than half the rate.
Is the old economic wisdom out of date? Can a Managed Economy be more successful than Free Enterprise?

As the U.S. banking system staggers and banks fail will the U.S government have to turn more to Chinese banks to balance their books? What affect (if any) would that have on international relationships? If China decided to take over Taiwan while their banks hold huge amounts of U.S. debt would that make a difference to the U.S. response?

Ford Prefect wrote:Yet here China is going against conventional economic wisdom and doing it at a record pace of growth while nations such as the U.S, Canada and most of Europe stagger on with much less than half the rate.
Is the old economic wisdom out of date? Can a Managed Economy be more successful than Free Enterprise?

I don't think so. I see no reason to doubt the solid theory behind free enterprise, just because the commies seem to be doing well. There are a lot of variables that you would need to take into account to make anything like a solid case.

A few questions:
1) Are you taking into account the boost from the Olympics? On that note, I heard someone suggest that the Olympics were the boost that Germany needed to pursue WWII (The Olympics were held in Berlin in 1936... Germany invaded Poland in 1939). That's kind of a sobering thought.

2) Are the growth numbers being compared per-capita?

3) Does China have welfare?

Growth percentages don't care about per-capita.

Also, China isn't really communist any more (if it ever was). It's a controlled economy, but a market economy nonetheless. And yes, it stands to reason a sensibly managed economy will outperform an unmanaged one.

The other thing is ... China is growing fast ... but that's because it isn't up to Western standards yet. When it closes on, or surpasses, that - you will see its economic growth slow. A lot.

(Its economic growth is almost entirely unrelated to the Olympics though. It's been going on long before that, and will continue long after.)

The Olympics cost China over 40 Billion dollars. They shut down industries in 5 provinces around Beijing to get the air clear enough for the athletes to compete. There is no net economic gain from the Olympics yet, if there ever will be.
I agree that free enterprise is one of the cornerstones of the boost in growth in China. Economic reform toward a more free market economy was clearly a huge boost to an economy nearly destroyed by hard line Communist policies. It is the political side that interests me, current economic theory would tell you that the Chinese political system should strangle growth by directing industry to products and services that best suit the government. This should make for a less efficient system yet here is China with growth rates over the last 5 years in excess of 10 percent. That kind of thing does not encourage any other nation to allow more democratic reforms into their government.

What also interests me is the concentration of capital in China. The world runs on money and when all the money is in China then China runs the world (not yet of course but it might happen). What will the world be like when China starts to dictate the make up of governments in Africa? Africa has huge untapped resources that China is going to need to sustain it's growth.

China, since it was behind the times relative to the west, has opportunity for growth that others don't. They are just now spreading product to their extremely large consumer base, consumers that before never dreamed of buying a car or a TV set etc. etc.

You can't compare two runners, one on the downhill leg and the other beyond the hills out on the flats and say which one is a faster runner based on their speed at that snapshot in time. Lets see who hits the finish line first to decide who ran a faster race....

By the way, one of your runners is a government who can censor the press, imprison and kill it's dissenters or command the poor to assigned work places as a part of their reforms and economic adjustments! How do you fit that into your comparison?

By the way, one of your runners is a government who can censor the press, imprison and kill it's dissenters or command the poor to assigned work places as a part of their reforms and economic adjustments! How do you fit that into your comparison?

That's part of what I'm talking about. There was a time when that kind of government was expected to be terrible at economics. It was supposed to be a guarantee of an inefficient economy doomed to under perform an un-oppressed work force. Such a political system was supposed to end up like the old USSR. Factories making ball bearings that were shipped to refineries to be made into steel for ball bearings and shipped back to the factory. That kind of thing. There was not supposed to be a hope of a repressive, controlling government steering an economy to anything resembling western living standards. Yet here we are watching it happen. International corporations were expected to support democratic reform since it would benefit them in increase economic activity. Where will they put their money now?
Yours and my distaste for an oppressive form of government counts for nothing in international finance.

Fair enuf…Ford…

I was watching the News Hour the other night, and this guy got up to the camera and just before the police stopped him he said, “China is a slave colony, without any civil rights”. So yea, sure, you will have a great life in China, as long as you pull the party line. Life in a guilded cage, so to speak.

Others have pointed out the obvious statistical stuff, such as the growth rate being high because of being so far behind in the first place, and there is plenty more that could be said along those lines.

We will just have to see how things turn out in the long run, to find out if your speculation is correct. I have a feeling that the civil rights issue may change the government, long before we can find out tho…

And just try to remember, they are using capitalism to build their economy, not communism, which is still in control of their social system. And as far as I can recall, it was always capitalism vs. communism in the economic playfield, and as far as I’m concerned, the social system is mostly irrelevant to the economy.

Money talks, and bull★■◆● walks.

And as far as I can recall, it was always capitalism vs. communism in the economic playfield, and as far as I’m concerned, the social system is mostly irrelevant to the economy.

Perhaps I've just read too many copies of The Economist to completely agree.
http://www.economist.com/

Personal peeve: Except for a few kibutz in Israel there are no communist economies so it is Capitalism vs Socialism. The other just smacks of McCarthyism and we should be over that.



And I certainly hope that you are right on this:

I have a feeling that the civil rights issue may change the government, long before we can find out tho…

A little chart to show what I mean…

Country.......Economic System......Political System

USSR..........Socialism*..............Communism
China..........Capitalism..............Communism
USA............Capitalism..............Democracy

Note: where you sited Russia as a failing economy and would expect China to do the same, that they are using a different economic system than the Soviet Union did.

*I don’t agree with your assertion, that are no communist economic systems, but I will give it to you here.

PS. You can split all the fine hairs you want, but I think you understand what I’m saying.

Spidey wrote: I have a feeling that the civil rights issue may change the government, long before we can find out tho…

I agree. No doubt that slavery helped the U.S. economy. A strong economy allows people to become more concerned for the well being of others.

Also, asian societies in general simply care more about education then "westerners". Labor will always beimportant, but in the last twenty years, the big $$ is in the widgits. The West cannot and will not compete with India/China/Japon/S.Korea, if our educational system is not fixed.

It's a culture thing.

I'm not quite sure what to call China's government (although the CIA factbook probably knows). It's not communism in its purest sense because it has a leader; and it's not democratic either, because the vote of the people only seems to affect the lowest levels of government from what I understand.

It is, obviously, a state controlled by one party; if others exist they don't have much influence over matters of national policy. That party isn't accountable to anyone except its own leaders. Thus, their agenda is China's agenda, and heaven help you if you disagree.

There may come a time when that'll change. I get the impression the leadership sees the writing on the wall for a controlled state.

Spidey: I know I was splitting hairs, thats why I called it a personal peeve.
I agree with your chart, although China is, as Sirius says not really a Communist state. The closest they got was the Great Leap Forward in the early '60s where the Red Guard ran around declaring anyone who was not a labourer an enemy of the state and sent them to farms or worse. They ran out of doctors, teachers and anyone that knew how keep a business ledger in a hurry and the whole thing collapsed in disorder. It turned into a huge leap backward and led to Mao's fall from grace.
With 1.3 billion people to keep under one government I don't know that China will ever become less autocratic without dividing up into smaller, more governable states.

I just checked into Fred Reed's Fred on Everything site
http://fredoneverything.net/FOE_Frame_Column.htm
and his latest rant has a nicely relevant quote for me.

The illusion of omnipotence dies hard. The American military has been dominant for so long that neither it nor Americans can grasp that there are limits to its power. America now tries militarily to encircle Russia, Iran, and China, which increasingly looks like an ageing pit bull trying to encircle a herd of moose. The Pentagon is planning for a war with China and talks of “Full Spectrum Dominance.” The current government in Washington wants to attack Iran and Pakistan, threatens Syria and Venezuela, and seems bent on igniting another Cold War with Russia (if one ignites cold wars). The Army is to be expanded.

Meanwhile China builds infrastructure.

Unfortunately his rant is just that - full of hyperbole and misleading accusations - but it does make a couple vaguely useful points.

Man... America really sucks, doesn't it?

Self-hate seems to be becoming a national past-time. It's a breath of fresh air when someone criticizes the U.S. without bashing it and simultaneously extolling other countries (the grass is always greener). Give me a break.

I really doubt the military has many illusions about its ability. I'd give them more credit than that.

Gooberman wrote:Also, asian societies in general simply care more about education then "westerners". Labor will always beimportant, but in the last twenty years, the big $$ is in the widgits. The West cannot and will not compete with India/China/Japon/S.Korea, if our educational system is not fixed.

It's a culture thing.

Especially when China's graduating 5 to 10 times the engineers as the US, where kids who enjoy math and science are still ridiculed as nerds.

Sirius: Fred is fun to read but I don't take him too seriously. Most times he doesn't take himself all that seriously either.
He has however a good pedigree. Ex-marine, purple heart from Viet Nam, writer for the Stars and Stripes, newspaper writer on the crime beat in Washington and very well travelled having recently been in China.
I have done none of the above.