4 ms·
An 4-yr old but still relevant cogent, more balanced than biased analysis. There are parts of the argument that are more dated, some arguments are surprisingly
by wallflower 12y ago
An 4-yr old but still relevant cogent, more balanced than biased analysis. There are parts of the argument that are more dated, some arguments are surprisingly still relevant:
> What Is the Chinese Economic Model?
1. Steal Intellectual Property. IP represents the crown jewels of the global economy; they are the peak achievement of Western civilization, and of all of China's competitors. China steals IP daily, in every possible way: through force, through simple copying, through reverse engineering, through industrial and government espionage, through common theft. China also has a national policy which prevents non-Chinese firms from selling in China unless companies transfer their most valuable IP to China as the price of market access. The clueless ones obey; just ask Boeing.
4. Industrial Policy: Subsidize Key Industries. Japan also started this idea, but China takes it much further. Originally, the government (or the People’s Liberation Army) owned virtually all large enterprises, but even today, it retains strong interests in most key export companies, which makes government assistance less transparent. Many outsiders assume they are dealing with “real†companies, when they are actually dealing indirectly with the Chinese government. Examples of subsidization and export dumping would include tires and, more recently, steel exports (sound like Japanese history?), now being tariffed by the E.U. and the U.S.
7. Price for Export, Suppress Domestic Consumption, and use domestic savings to drive the above policies. While everyone is talking about how wealthy the new Chinese coastal middle class has become, they forget that there are another 800MM+ Chinese still waiting inland on the farm for anything good to happen to them. Despite the latest boom, the Chinese people are still among the top global savers. China seems to be allowing faster wage growth, and is encouraging domestic consumption, more than Japan has.
http://blog.stratnews.com/2010/01/what-is-china/ http://blog.stratnews.com/2010/01/what-is-china/
- njs12345 12y ago4) and 7) were certainly factors in Korea becoming a developed nation too - lots of detail about this style of development in 'Bad Samaritans' by Ha-Joon Chang: http://www.amazon.com/Bad-Samaritans-Secret-History-Capitalism/dp/1596915986 http://www.amazon.com/Bad-Samaritans-Secret-History-Capitali...
- narrator 12y ago>Chinese banks are not banks; they are cash distribution pipelines, generally controlled or heavily influenced by the government. Selective industries are fed loans, based on the flavor of the week, on terms dictated from above. When the pipelines are empty (as they are now), the government just inserts more money into the other end. This is the single most different aspect of the Chinese system. Banks operate as partially privatized central planning. The government prints its own money and hands it out to the banks whenever they lend badly to favored government entities. Corruption in banking is dealt with severely to prevent the bad behavior that the moral hazard would entail. There is such deep denial of the corrupt nature of private money creation in banks in the west that most analysts overlook this as a key advantage of the Chinese system. How many years have we had predictions that the Chinese economy was going to bust any day now?
- tomp 12y agoI find you comment interesting and agreeable, but I'm not sure what to make of this sentence: > There is such deep denial of the corrupt nature of private money creation in banks in the west that most analysts overlook this as a key advantage of the Chinese system. Can you maybe explain it? Are banks more corrupted in the West or in China? Is <something, I'm not sure what> an advantage or a disadvantage of the Chinese system as compared to the west?
- marcosdumay 12y agoBanks loan much more money than there is available, creating systemic risk and in extreme cases making the government unable to directly control inflation. The upside is that loans get much cheaper, making it possible to invest on enterprises that wouldn't exist otherwise. Looks like banks in China can only do that with their government authorization.
- seanmcdirmid 12y agoBanks in china use every loophole available to lend more than the gov wants them to; the government is more reactive than proactive in reigning the banks in. Of course, the government is incredibly multilayered and not cohesive, so usually this simply means local government vs. central government.
- vidarh 12y ago> they forget that there are another 800MM+ Chinese still waiting inland on the farm for anything good to happen to them. As of 2012, more than 52% of China's population was urban. Granted, at the time that still meant something like 640 million outside the cities, but not by far all of those are "waiting on the farm" either.