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I agree it's keeping the economy poorer, but is it harming the world economy? People are getting goods at lower prices, that frees up more money for investment
by dantheman 17y ago
I agree it's keeping the economy poorer, but is it harming the world economy? People are getting goods at lower prices, that frees up more money for investment. So I'd say if anything it's improving the world economy. Once again, I feel the only objection is that it is unfair to chinese citizens because the are essentially being stolen from. As for you comment on 2nd order effects, I think that is incorrect -- China only competes on labor costs, they don't sell goods for less than the material costs. Now if you're saying that they can use less efficient (more wasteful) processes since the difference is made up in labor, I'll agree -- but I think they'll adopt the more efficient processes to increase their bottom line eventually.
- comment176 17y agoWhat's the use of getting a good at a lower price if you've lost your job? To get back to your original question, I think the global economy may have been hurt due to China's mercantilist policies. Some perceive China to be adopting non-cooperative "I win, you lose" strategies that will motivate defensive and non-cooperative measures from other countries. This is bad, potentially very bad. Also, even if the global economy is better now than it was when China was undeveloped, that doesn't mean China's policies are ideal. The world economy might be even better than it is now if China changes its policies, increases its internal demand and spends down its surplus.