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> There's even an outside possibility that China's economic miracle could end up in a fiery crash landing People have been saying this since Deng Xiaoping took

by obrero 11y ago

> There's even an outside possibility that China's economic miracle could end up in a fiery crash landing People have been saying this since Deng Xiaoping took over, over 35 years ago. Actually, they've been saying it for over 65 years.

hga 11y ago
I think these two events in the last 65 years count as "fiery crash landings": https://en.wikipedia.org/wiki/Great_Leap_Forward https://en.wikipedia.org/wiki/Great_Leap_Forward https://en.wikipedia.org/wiki/Cultural_Revolution https://en.wikipedia.org/wiki/Cultural_Revolution Note the latter created an uneducated generation, and as of late we've been learning a lot more people were slaughtered than was generally thought. Moving forward past the Gang of Four, it's hard to see how this experiment won't end in tears: https://en.wikipedia.org/wiki/One-child_policy https://en.wikipedia.org/wiki/One-child_policy Where it's strictly enforced, it results in what's called 4-2-1, where 4 grandparents are supported by 2 parents (as long as they can) are supported by 1 child. That, the lack of a general social safety net, and the general government policy of financial repression (https://en.wikipedia.org/wiki/Financial_repression https://en.wikipedia.org/wiki/Financial_repression) appears to be short circuiting a lot of what I presume The Economist article is talking about, for many people are desperately trying to save for their and their elders' old age instead of spending like "normal" consumers. E.g. one reason for the property and other bubbles, which held out the promise of better investment returns.
- dreamfactory2 11y ago
  I suspect very few commenters here have visited China lately. There is a ton of consumer spending in China. Apple stores everywhere in big cities, way more than London or New York for example. The biggest name luxury brands are all over the place. Cost of living in Shanghai is on par w San Francisco, Beijing is probably higher.
  - hga 11y ago
    Never visited, didn't even read the The Economist article (didn't want to use up my quota of them) but: There is a ton of consumer spending in China. Apple stores everywhere in big cities, way more than London or New York for example. The biggest name luxury brands are all over the place. Cost of living in Shanghai is on par w San Francisco, Beijing is probably higher. Are any of these signs of middle-class prosperity? The general theory here is that you want a huge middle class spending a lot of money. In aggregate, in the US at least in times past, the broadly construed middle class had more wealth than the upper class, spend more, and also provide useful functions WRT to upper class earnings and spending. E.g. how cool are the Apple products that I see for sale in my local Wal-Mart? I.e. to what extent does middle class adaptation of upper class fashions drive changes in the latter?
    - dreamfactory2 11y ago
      Yes it's something we think of as key. They also have very busy Uniqlos and Ikeas (if you wanted to get nitpicky those might be thought of as a bit upper middle class there, but then you could look to Taobao or all the local brands). And the fact is that those cities are hugely populous and all those shops are doing a roaring trade. I'd say the diagram in the article looks pretty on the money in terms of rapid growth of middle class. It's not as big as in, say, Germany of course but it's definitely there and looking very healthy. There doesn't appear to be _significantly_ greater poverty in the streets than in NY, LA, or SF. There is clearly disparity as you might expect in a turbulent emerging economy - the levels aren't too obviously dissimilar to much of the US or UK and visibly greater than western Europe and Nordics. Shanghai already makes many major Western cities look like a backwater.
- obrero 11y ago
  The fiery crash landing in China was the pre-PRC era, where China was so weak that it was being carved up by the Europeans, Americans and Japanese. The Cultural Revolution kicked off an era of double digit GDP growth in China, which persists to today. I think the Cultural Revolution created one of the most politically educated generations in history. The PRC seems to have survived its graduate schools closing for a few years. Didn't the US and Europe see a dropoff in college and grad school during the early 1940s? They managed to survive that. Personally I think that empowering young people to smash and burn Buddhist sculptures and paintings, and to eradicate the feudal vestiges of China are what helped it onto its current path of prosperity. Also, the pathology of focusing on bodies instead of GDP per capita can be found in the US in the Social Security debate. Instead of dividing the GDP by the number of people collecting social security, they count bodies working and retired, as if GDP per capita were not rising. This approach only works where there is no GDP growth. GDP per capita in China doubled in the past eight years, and quadrupled in the past thirteen years. The feudal thinking was that something like 4-2-1 is a problem. The standing committee of the Politburo of the communist party of China knows that the problem was too little economic growth, and too many children for each peasant family. If they thought your way, they really would be worse off.
  - AnimalMuppet 11y ago
    > The Cultural Revolution kicked off an era of double digit GDP growth in China, which persists to today. That's, I suppose, chronologically possible. That is, the growth kicked off after the Cultural Revolution. Note well the word "after". The Cultural Revolution ran for 10 years (1966-1976), per Wikipedia, and then later, after that, China kicked off an era of double digit GDP growth, which persisted in China until maybe a year ago. That "later, after that" part is part of what makes me really skeptical of your view that it triggered the GDP growth. It seems much more reasonable to suppose that the trigger was Deng's reforms.

by obrero 11y ago

hga 11y ago

I think these two events in the last 65 years count as "fiery crash landings": https://en.wikipedia.org/wiki/Great_Leap_Forward https://en.wikipedia.org/wiki/Great_Leap_Forward https://en.wikipedia.org/wiki/Cultural_Revolution https://en.wikipedia.org/wiki/Cultural_Revolution Note the latter created an uneducated generation, and as of late we've been learning a lot more people were slaughtered than was generally thought. Moving forward past the Gang of Four, it's hard to see how this experiment won't end in tears: https://en.wikipedia.org/wiki/One-child_policy https://en.wikipedia.org/wiki/One-child_policy Where it's strictly enforced, it results in what's called 4-2-1, where 4 grandparents are supported by 2 parents (as long as they can) are supported by 1 child. That, the lack of a general social safety net, and the general government policy of financial repression (https://en.wikipedia.org/wiki/Financial_repression https://en.wikipedia.org/wiki/Financial_repression) appears to be short circuiting a lot of what I presume The Economist article is talking about, for many people are desperately trying to save for their and their elders' old age instead of spending like "normal" consumers. E.g. one reason for the property and other bubbles, which held out the promise of better investment returns.

dreamfactory2 11y ago
I suspect very few commenters here have visited China lately. There is a ton of consumer spending in China. Apple stores everywhere in big cities, way more than London or New York for example. The biggest name luxury brands are all over the place. Cost of living in Shanghai is on par w San Francisco, Beijing is probably higher.
- hga 11y ago
  Never visited, didn't even read the The Economist article (didn't want to use up my quota of them) but: There is a ton of consumer spending in China. Apple stores everywhere in big cities, way more than London or New York for example. The biggest name luxury brands are all over the place. Cost of living in Shanghai is on par w San Francisco, Beijing is probably higher. Are any of these signs of middle-class prosperity? The general theory here is that you want a huge middle class spending a lot of money. In aggregate, in the US at least in times past, the broadly construed middle class had more wealth than the upper class, spend more, and also provide useful functions WRT to upper class earnings and spending. E.g. how cool are the Apple products that I see for sale in my local Wal-Mart? I.e. to what extent does middle class adaptation of upper class fashions drive changes in the latter?
  - dreamfactory2 11y ago
    Yes it's something we think of as key. They also have very busy Uniqlos and Ikeas (if you wanted to get nitpicky those might be thought of as a bit upper middle class there, but then you could look to Taobao or all the local brands). And the fact is that those cities are hugely populous and all those shops are doing a roaring trade. I'd say the diagram in the article looks pretty on the money in terms of rapid growth of middle class. It's not as big as in, say, Germany of course but it's definitely there and looking very healthy. There doesn't appear to be _significantly_ greater poverty in the streets than in NY, LA, or SF. There is clearly disparity as you might expect in a turbulent emerging economy - the levels aren't too obviously dissimilar to much of the US or UK and visibly greater than western Europe and Nordics. Shanghai already makes many major Western cities look like a backwater.
obrero 11y ago
The fiery crash landing in China was the pre-PRC era, where China was so weak that it was being carved up by the Europeans, Americans and Japanese. The Cultural Revolution kicked off an era of double digit GDP growth in China, which persists to today. I think the Cultural Revolution created one of the most politically educated generations in history. The PRC seems to have survived its graduate schools closing for a few years. Didn't the US and Europe see a dropoff in college and grad school during the early 1940s? They managed to survive that. Personally I think that empowering young people to smash and burn Buddhist sculptures and paintings, and to eradicate the feudal vestiges of China are what helped it onto its current path of prosperity. Also, the pathology of focusing on bodies instead of GDP per capita can be found in the US in the Social Security debate. Instead of dividing the GDP by the number of people collecting social security, they count bodies working and retired, as if GDP per capita were not rising. This approach only works where there is no GDP growth. GDP per capita in China doubled in the past eight years, and quadrupled in the past thirteen years. The feudal thinking was that something like 4-2-1 is a problem. The standing committee of the Politburo of the communist party of China knows that the problem was too little economic growth, and too many children for each peasant family. If they thought your way, they really would be worse off.
- AnimalMuppet 11y ago
  > The Cultural Revolution kicked off an era of double digit GDP growth in China, which persists to today. That's, I suppose, chronologically possible. That is, the growth kicked off after the Cultural Revolution. Note well the word "after". The Cultural Revolution ran for 10 years (1966-1976), per Wikipedia, and then later, after that, China kicked off an era of double digit GDP growth, which persisted in China until maybe a year ago. That "later, after that" part is part of what makes me really skeptical of your view that it triggered the GDP growth. It seems much more reasonable to suppose that the trigger was Deng's reforms.