Acknowleding the "Chinese Workers"

[pluthra]

So, Times chose Ben Bernanke for their person of the year, and followed that list up with a few key people, including the "Chinese Workers." Now China's been all up in this crisis and they've definitely been able to come out somewhat strong (since we don't really know what will happen next). But, what's really bugging me is a lot of these articles about China talk about how they've seen GDP growth, and productivity growth (which I personally think is a very flawed tool to measure how well the economy is doing). But I think that were a lot of people are going with the Chinese economy and all may be too early to expect. So, I was wondering what others' thoughts are??

So, a point that is brought up a lot is how the Chinese economy is driven by the global economy. I mean hey it even came to a point where the Chinese became extremely concerned, and Obama himself did encourage the Chinese to realize that they cannot rely on the US to be its largest source of demand.
And everyone always talks about this need for "innovation," and does China have it? I don't see any innovation heading our way anytime soon, unless Obama's "go-green" idea does work, but even that it seems like there's so many loose ends that need to be tied up. Now I'm no expert on the Chinese economy, but it just seems that they're able to basically in this phase that the US was when they began urbanizing and all, and saw that huge change. So maybe down the road they might as well be sitting in the same ditch we are.

Also, how come India is always lacking in some way? I mean I'm not trying to hate on them, but there's soooo many people in India too. Why can't we figure out what to do? I mean there seems to be people who know what they could do to improve the state of the economy, but when it comes down to it its just talk. If you wanna read more about the latest conference in India that brought together a bunch of big guys (well not too big) check this out: http://online.wsj.com/article/SB126111811767096815.html. I thought it was kinda a drone. But I did like this: "We don't have great role models; we need Indian examples of people who give." And this is just in the case of giving...I think we need someone who really comes out and sets about this hugeee change. I mean Manmohan Singh is great (actually no lie I don't know much about him :/)....but my point is I think we're lacking the leader who can bring about great change (actually I think we'll need more than 1 b/c there's way to many problems for each region and you can't expect one guy to know how to deal with each region).

So, now that i basically i went into a few different topics and have lost my original point...yaaaa (please refer to the above paragraph for the questions thanksss =) andddd here's the times article: http://blogs.wsj.com/chinarealtime/2009/12/17/time-sees-%E2%80%98chinese-worker%E2%80%99-as-economic-savior/

andd the runners up: http://www.time.com/time/specials/poylist/0,32517,1946375,00.html
(if someone goes into tiger woods on the people who mattered on this post i will go off on you sooo DONT)

 

[Varun]

Political Leaders don't bring change, its the people who ultimately do it. China has had a host of charismatic leaders but one cannot say that they are responsible for China's success today. Mao Zedong is revered but his Cultural Revolution and Great Leap Forward ruined the nation. Deng Xiaoping is the one attributed for bringing about the capitalist economic reforms of the 70s/80s but without the actual hard work of the Chinese, foreign investment (greatly spurred by Chinese/Taiwanese diaspora), and free trade agreements of other govts, then once again nothing would happen.

Same way, just because Manmohan Singh ushered in the reforms of the 90s, doesn't mean he's really responsible. It was the common citizens and businesses that pushed forth growth (Infosys, Cisco, Tata group, Reliance, etc). I would say we need LESS leaders, less bureacrats who get in the way of development and free market reforms.

 

[Summy]

Good Job Parul, finally something worth commenting on... SO there are two things to this post, one what Parul was gettin at with the Chinese Economy, and Varun with political entities...

Firstly Varun... Im going to go completely opposite with you on this one... Political Leaders are the only ones who can actually, legistically bring about change. An uprising of the people, even the expendatures of the people (econmically speaking) is dependent on what is put forth by our policy makers. As a people you can do what you want, unless you have political decision makers backing you, the idea will die with those who hold it true... I think what we saw with the economic downfall of the states is that the private sector, the public and every company in between is ultimately at the mercy of policy...

Also, a few things... Charismatic Chinese leaders? Haha, since when? I cant remember one leader from the most secretive of governments being :charismatic".. "China's success" as you put is, came at the price of the humanity diginity of their people and relied on the exploitation of the working class... When you have no restrictions when it comes to standards of work conditions, exploitation of the working class and so forth, the money making opperunties grow in numbers. I mean, I think there is no debate that the rise of socalist reform in China gave rise to some of the worst conditions/ some of the most horrendous profiteering of the people in recent history... It was not hard working of the people, it was blatent abuse and prostitution of the people... China has been long secretive for a reason... That country is as bad it comes when you taking about how the people are involved in the rise of economy...This cannot be something new to anyone... I would even venture to say, next to stalin and hitler, the chinese people of the 60's forward were some of the most exploited people in history
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Parul,

Okay, now the good part. Coincidence or maybe fate, I JUST read an article of forbes like literally 48 hours ago just about this topic (ill try to find it). Basically it was in response to the Chinese PM RAILING the US on fiscal responsibility. The PM went nuts, basically publicly called the US a bunch of idiots. He talked about hoping the US will learn how to control their deficit, so there will be a stable exchange rates, which will lead to stable trading and hopefully a recovery of the world economy... something along those lines... and basically he is right.

Its my personal opinion that the Chinese have a brighter future than the US... There are a couple of reasons why...

Do people know that of the US's total Debt, it owes 25% of it to China... ONe reason why the Chinese want a stable dollar is because I remember reading that with the decline in currency, China lost almost 130 billion dollars of the 800 billion owed... Basically in a few words, China was able to abuse the US's vulnerablity to the order of almost 1 trillion dollars.

Having said that, more to what parul is talking about, the Chinese came out stronger for a reason. The US has a lot to learn from China. China invested 600 billion in recovery money, a stimulus package, which was 100 billion less than the US. I cant remember the number but the response to the package was almost 5 times as effective as the stimulus in the US. The US continued to invest in their too big to fail banks, which just perpetuated the crisis, while China invested in creating immediate new demand. The result... the Chinese economy recoverd and soared, and the US economy fluttered and the US added to its on-going problems.

China's economy is growing three times faster than the US. the finicial reserve of china represents alosmt three quaters of the worlds reserves. China is literally dominating the natural resource race...

having said this... i am in NO WAY a supporter of the methods of acquisiton displayed by the chinese government. Oil by investing in countries like Sudan (which finances the government responisble for the darfur genocide) and other investments by the Chinese are as shady as it comes... just want to make that clear.

The ass kicker is that China is beating the US as its own game... The center of auto industry has shifted, the US is WAY behind (probably decades) in the auto manufacturing buisness, technology and every other front...cheap electric cars, afforablitiy, and the reduction of the use of natural resources... CHina is miles ahead in the use of wind power and alternative energy sources...

Basically, years of irresponsible spending and the "uncle sam mentality" , and america's bad ass go go go attitude have left the country behind in every aspect. The fact of the matter is as almost every estimate puts the economies of India and China at # 1 and #2 (the rankings depends on the two depend on what source) by 2050. That is INSANE if you think about how many years ago India was under british rule, and what state China was in around the same time periods.. these growths unheard of...

Ill go in the India economy another time because this post is way too long....

Basically, the seeds for the fall of the superpower are in place.

 

[Sohaj]

The answer to the question 'Will India and China be the greatest economies' depends on the metrics being used to answer. Lot of people think that China and India will catch up to US GDP. I think the jury is still out on that one. China's GDP is around 4trillion and they possibly can't keep growing at the rate they have over the past few years. China's GDP per capita is $5500 and India's 2600. You can't compare these abysmal numbers to US's or any other developed nation's.

Parul: I agree that GDP growth might not be the best measure but combined with other metrics, it can give a pretty good picture. I personally think the best way to see the strength of a country (by strength I mean individual liberty, economy, opportunities, infrastructure, etc) is to look at its immigration patterns. My guess is that US ranks extremely high in destination for migrants while China and India don't even come close. As far as innovation goes, it doesn't really happen overnight. You can invent a thing at some point on a calendar but for it to really have an effect in an economy, it needs to have a right policy environment (going along with Summy's statement about the importance of smart policy makers). I think there is lot of promising research being done in green energy, health care, fiber optics, among other things. For me, one of the biggest disappointments of the Obama administration has been its lack of investments in infrastructure. I am not talking about roads and stuff but things like running fiber optic wires throughout the US, providing free internet to every American, creating charging docks for your car along every highway, vertical farming paid for by government in big cities, etc. Our country was on the brink of collapsing and if there ever was the right political environment to do something big like that, that was it. Still, innovation takes time and hopefully government gives people the right incentives and policies to succeed and have a larger effect on the economy.

I do think that India and china play a huge role in global economy but that doesn't necessarily equate to the demise of US. US might not be hegemon in future (which I think in principle is bad for the world) but it still will be one of the superpowers competing with others nations. More competition always drives innovation.

 

[terabaap]

China didn't really have a need for a domestic market until the shit hit the fan. Now they are realizing what their reliance on foreign markets has done;less money in a recession, esp since consumer spending took a huge plunge. At the same time it helps to have a communist regime in place. Easier to get things done...
Actually China does have innovation-in the form of manufacturing processes. They aren't up to Japan's level, but remember a time when everything from Japan was considered crap?(actually we shouldn't, since we were just born).

I'll try and get some more comments in a few days.

 

[Sohaj]

China didn't really have a need for a domestic market until the shit hit the fan. Now they are realizing what their reliance on foreign markets has done;less money in a recession, esp since consumer spending took a huge plunge. At the same time it helps to have a communist regime in place. Easier to get things done...
Actually China does have innovation-in the form of manufacturing processes. They aren't up to Japan's level, but remember a time when everything from Japan was considered crap?(actually we shouldn't, since we were just born).

I'll try and get some more comments in a few days.

China has been trying to increase its domestic demand:

http://www.bloomberg.com/apps/news?pid=20601089&sid=aIe4hkKEETF8

Lots of economist argue that China needs to encourage domestic consumption over the long run (not as much as US but definitely more than China's) and I think they are starting to do it. I remember reading somewhere (might have been the IMF report) that its actually part of their 10 year plan.

 

[pluthra]

Having said that, more to what parul is talking about, the Chinese came out stronger for a reason. The US has a lot to learn from China. China invested 600 billion in recovery money, a stimulus package, which was 100 billion less than the US. I cant remember the number but the response to the package was almost 5 times as effective as the stimulus in the US. The US continued to invest in their too big to fail banks, which just perpetuated the crisis, while China invested in creating immediate new demand. The result... the Chinese economy recoverd and soared, and the US economy fluttered and the US added to its on-going problems.

Ok, so I don't know much about the Chinese recovery plan, but I personally don't think that a lot of the money from ARRA and TARP was put into the banks. I mean sure it may seem this way, but I mean it was the fastest way to literally help the nation. And also, all of i think its $787 or $800 billion the 2 are different amts, but whatever they are that total amount has not been spent yet. So, we don't have literally like $800 billion driving the economy.

And everyone keeps saying oh this package is creating demand here, and this stimulus creating demand here etc etc etc. Well, my concern is to what point will government have to create demand? Like the US can't continue to offer tax incentives to home buyers and offer cash for clunkers programs every year, just because the car industry is taking a huge hit. It seems that everytime the government backs out of creating a reason for people to spend, people do literally stop spending. So, when will we see the end of a command economy?

and sohaj I did say productivity growth not GDP growth, I'm sure the GDP is a good evaluator of where we might be headed (but even that has its flaws). And just wondering...usually when I think infrastructure I think okay the roads etc because that is were the biggest spending is and its also the easiest to see for everyone since its happening right in front of their eyes. But has Obama gone into details on the infrastructure changes? I mean if he did I think we could see that hey the US isn't just creating temporary jobs and that might actually change a lot of people's views on recovery.

 

[terabaap]

China didn't really have a need for a domestic market until the shit hit the fan. Now they are realizing what their reliance on foreign markets has done;less money in a recession, esp since consumer spending took a huge plunge. At the same time it helps to have a communist regime in place. Easier to get things done...
Actually China does have innovation-in the form of manufacturing processes. They aren't up to Japan's level, but remember a time when everything from Japan was considered crap?(actually we shouldn't, since we were just born).

I'll try and get some more comments in a few days.

China has been trying to increase its domestic demand:

http://www.bloomberg.com/apps/news?pid=20601089&sid=aIe4hkKEETF8

Lots of economist argue that China needs to encourage domestic consumption over the long run (not as much as US but definitely more than China's) and I think they are starting to do it. I remember reading somewhere (might have been the IMF report) that its actually part of their 10 year plan.

yup, proves my point. They realized how actually creating an increase in per capita income will help them reduce their reliance on foreigners.

 

[Varun]

For me, one of the biggest disappointments of the Obama administration has been its lack of investments in infrastructure. I am not talking about roads and stuff but things like running fiber optic wires throughout the US, providing free internet to every American, creating charging docks for your car along every highway, vertical farming paid for by government in big cities, etc. Our country was on the brink of collapsing and if there ever was the right political environment to do something big like that, that was it. Still, innovation takes time and hopefully government gives people the right incentives and policies to succeed and have a larger effect on the economy.

True, such infrastructure developments would not only improve our quality of life but also keep the U.S. ahead of the global-competitive curve. I saw an interview with the Sec of Transportation who said that they are planning some of the drastic infrastructure changes (highspeed commuter rail for all of US) but it obviously will take a long time until implementation.

To the point on political leadership: I guess I should have specified. Yes, public policy is necessary to allow more freedoms in business but the idea of leadership, in the very cult of charismatic leader sense, is what i was criticizing. Just because you have a real sly talker up on the podium like Obama doesn't mean you can defy economic laws. China really just followed simple economics. They had a resource (large population) and specified it to a sector (manufacturing). Makes sense in creating a cheap, quality product. But who was the one that really got the manufacturing going? No not the government (who were still insisting that agricultural investment was the best) but the independent factories and plants that opened up and the workers who filled those plants. Exploitation? Sure, but no one is pointing a gun to anyone's head to work. In fact, people rushed from the countryside to work in these factories. This economic activity can explain why Time named the "Chinese Workers" not the Communist Party or the Government, its People of the Year.