xtisme Marx was quite explicit about what he saw as the path to a true communist society.
Yeah, I know he was mswas. I read a lot of Marx when I was a wee bairn. Want to point out to me where he said a communist country needs to go through a period of capitalism on the road to socialism? I must have missed that part.
Granted, China (or Russia) wasn’t exactly what Marx had in mind when he was thinking of likely nations that would first throw off the shackles of capitalism and breath the free air of the new workers paradise, so perhaps I was being a bit more tongue in cheek than the assertion warranted. Frankly, whatever Marx did or didn’t have in mind is of militant indifference to me these days, since his theories have basically been relegated to the dust bin of history IMHO. YMMV of course, and on this board you wouldn’t be in the minority in thinking that his stuff is poised to make a big come back…any day now…any day…
-XT
I don’t think it’s poised to make a big comeback. And I’m not a scholar of Marx’s work so I couldn’t point you to direct citations. I’ll let elucidator handle that. Or maybe olentzero will come around, I think he can quote his bible from memory. 
I didn’t think you were, FWIW. 
If they want to quote relevant texts from the holy book of writ, they are more than free to do so. I’m sure you could twist or stretch several things I can think of off the top of my head to fit. But it WOULD be a twisting and a stretch, as I’m sure they know.
I’m really not all that interested in any case…was just tweaking 'luci a bit (who, I doubt, was all that serious either).
-XT
Well, of course, they may have contractual obligations to re-pay some of their investment capital put in by their “chinese parnter” (i.e. the chinese government) before they can extract profits. This isn’t groundbreaking and it’s totally unobjectionable - bondholders and preferred stockholders get their cuts before common shareholders see dividends.
I’m sure you meant well, but I really wouldn’t make bald assertions about the relationship between foreign entities and removal of capital from China based on one personal anecdote where, you readily admit, the details are lost on you - it doesn’t do much to advance the discourse. As **mswas **says, if this really is the case, then foreign investment in china would be close to nil.
hit the wall? you’re kidding right? the rate of growth will decrease by then, sure, but you are talking about, today, a country with 10 times the population of the United States at a time when their respective economies started to really expand the middle class. That is just fucking huge potential economic energy, there. They’ve got 80 years of western experience and technological advancement to pilfer/learn from, so they can shortcut a lot of the growing pains that the “first” set of mass economic democracies had to suffer.
20 years? In 20 years we will be rapidly progressing to the footnotes of history.
Rumor_Watkins The extra information he has provided has changed how I view it. I can imagine that China would indeed provide tax breaks to profits that are promised for reinvestment in the country.
kobal2 I really would be interested in the extra info you can get from your Mother on the details. At first it seemed like an incredible claim but it makes a bit more sense now.
I too would enjoy the details, but I don’t think that companies would have made the decision to invest if they were facing 99% tax rates that could only be abated by their decision to re-invest in china. Sure, that’s a grand long term strategy - but one without an exit strategy.
Short sellers have historically been some of the most disciplined and well researched/ informed investors on Wall Street.
And Chanos is a legend in those circles. Anybody can be wrong (and we just experienced the last 3 years where everyone from the Fed chairman, Wall Street and almost all of America was blind to a coming tsunami) and so maybe he’s wrong.
But I sure wouldn’t play cards against this guy.
Sure, there is a lot of potential. But I think it’s you who is fooling themselves if you think that the current political model will forever be comparable with an expanding economic model…or that China will somehow magically be able to expand forever without problem or hiccup. Eventually there is going to be a clash between the old guard and the new, and in that clash something will have to give.
-XT
yeah, ok. because the common citizen can’t sully the name of Deng or Mao they are teetering on the brink of political insolvency. keep the money flowing and new dishwashing machines coming, and they won’t give a shit. just like us.
shrug If you can’t see the basic conflict there or the divergence between the old guard political system and what has been happening in the last decade or so then there really isn’t anything to debate. If you want to see China as simply just like the US (but with panda bears) then that’s your lookout.
-XT
Deng’s 4 reforms happened 20+ years ago. It’s not anything dealing with this decade.
Political instability and revolutionary pressures rear their heads when there is either a concentration of wealth/power to a degree that begins to operate on the masses in negative ways or there is insufficient economic growth to keep the masses in check. The current government has had 20+ years to operate without political check, and with the exception of Tienanmen, which was an unfortunate confluence of many independent events, there is no indication that they’re going to fuck something up.
Casual observer here, so please be gentle. But my impression is that the incentive for foreign investment in China is the product being shipped. China does the production, the investors the distribution. The latter make their profit on the sales. If this is right, they never have to recover the infrastructure investment directly.
This is fairly common, actually. R&D isn’t generally recovered by selling the IP. It’s recovered by producing goods which are sold at a healthy profit above the relatively small marginal cost of producing the ultimate product. Or consider another example. Pressing a DVD is cheap. Financing a movie is expensive. You don’t need to recover the cost of producing a movie directly. You recover it by license fees and selling DVDs.
IOW, it can be difficult to repatriate the direct investment in China (on which I know nothing either way), yet make good business sense to do the deal.
James Chanos doesn’t really say anything except that there is a property bubble in China. No duh. However, when you require 40% down on a home mortgage, it’s hard to get into a sub-prime kind of meltdown that is infecting the West right now. No other details of note in the article.
I am expecting the Chinese economy to tank in say the next 6-12 months. But it’s all relative. That means a "standard’ type recession (inventory adjustment) rather than a full on economic reset as the sub-prime economic crisis is causing.
China no doubt has a shitload of problems. The greying population, over population and the environment to name but three. Unbridled capitalism combined with the vestiges of socialism/command economy being a fairly uniquely Chinese challenge. Resurgent inflation is also worrysome and bank bad debt is going to explode. I dunno, when I first came here in 1985, I thought China didn’t have a hope in hell of modernizing. This country has done far better than anyone ever expected, and the leadership for all their sins has done a pretty decent job considering where they came from to where they are in the past 3 decades.
Also, hasn’t their population control policies left a shortage of Chinese women? It sounds funny in a “China wants your women” kind of way, but there are some serious socialogical concerns about a society where a significant number of young men can’t find a mate.
Like any speculative bubble, the problem is knowing when it’s going to end. In the meantime, it’s hard not to jump on the bandwagon when you see so many people making money.
Manufacturing overcapacity and property bubbles are due for a correction, perhaps, but there is too much economic potential in the 700 million not yet exploited by capitalism’s taint. It’s a bit amateurish to call that a “collapse”.
China you are forgetting has the advantage of backwardness so for it to have huge growth rates year in and year out. This is just merely them catching up with the rest of the developed nations, and once this happens, the growth rate will drop off towards what we see in the West as the shift emphasises towards high quality goods and technology investment.
Think about it, they’re from a low productivity base 30 years ago, advanced capitalist nation states have had about 200 years headstart.
Dear China:
As a cordial expression of our support and solidarity, we are sending you ten thousand of our best and brightest financial experts from the ranks of the management of AIG, Lehman Bros. and sundry others.
No, don’t thank us. Least we could do!
Your pal,
America
They do have a big property bubble and a big equity bubble but any collapse in China is going to be temporary. When you compare them to us they’ve got an awful lot going for them. We’re Britain at the end of WW1 and they’re America at the end of WW1. They have a minging system of government but from a simple GDP growth point of view their governance and governing culture is inestimably superior to ours.