Monday, December 31, 2007

The Economic Fraud that is China

Long-time readers of this blog know that I think the Chinese economy is much smaller and less robust than most believe. Part of the difference between the perception of China and the reality is that China lies about and inflates their economic statistics, as does every Communist country. China’s banks “lend” money to businesses to expand and build capital without any real expectation that these loans will be paid back, then must carry these non-performing rolls on their account sheets because the central government refuses to allow these companies to go bankrupt. Western companies are complicit in these fictions, because these western capitalists think that by turning a blind eye to Chinese economic perfidy, the “rich” Chinese market will be open to their Western goods.

Well, it turns out that people are finally opening their eyes to the fact that China is not nearly the huge economic juggernaut we have been lead to believe. New statistics from the World Bank show that China’s economy is about 40% smaller than advertised, making it about half the size of the US. The average consumer in China is about 1/10th as rich as the average American.

The fact that the Chinese juggernaut has been revealed as a phony should also alleviate some of the fears that China was going to challenge the US for supremacy in the western Pacific. With the combined naval might of the US and Japan, with Singapore’s excellent air force patrolling the Straits of Malacca and the Indians doing their thing in their own ocean, China does not represent much of a threat, at least to the US. China is of course a bully towards Taiwan, and continues to menace that island democracy. But China is no threat to the US, at least not in the near future.

I do want to thank the Chinese for bankrolling the dramatic improvement in the US standard of living we have experienced the last 25 years. Without the Chinese willingness to mortgage their future and subsidize cheap consumer goods for the American market, our lives would not be nearly as rich. So, to the impoverished, enslaved Chinese factory worker and their Communist overlords, I say, thank you for my flatscreen TV, thank you for my cheap GPS, thank you for my Ipod, and thank you for subsisting on rice and seaweed so that I might enjoy my Sirius radio. Good work guys, I will wave on my way to the Olympics from the backseat of my Mercedes taxi as you desperately try not to be run over on you rickety bicycle as you go from your overcrowded hovel to the sweatshop were you work. The unfortunate concomitant effect has been to kick the teeth out of the Mexican manufacturing base of their economy which has forced a quarter of their population to relocate north of the border (and for most of them to move next door to me), but you take the good with the bad. And finally to the Chinese I say, Xin nian quai le! Happy occidental new year!

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