[QUOTE=China Guy]
Where to start? I’ve got a 20+ year experience of being on the ground in China. When I first came here, I thought there was no way the country would modernize, not that the modernization would be too fast and too unrestrained.
First, China today is not the China of Tian’anmen or Mao. Since Tian’an men, the economy has doubled more than twice. All the old social “work unit”, collectives, neighborhood watches, etc are either museum relics or close to it.
Second, this is not a communist economy. The State sector and state owned enterprise continues to shrink as a proportion of the economy. IIRC it’s well below 20%. This is a wild wild west no holds barred capilitalist economy with little government oversight. Pet food and toothpaste scandals are not some communist conspiracy, but rather unrestrained capitalism that wasn’t caught.
Third, for the first time in Chinese history, both the peasants and workers have more or less unrestrained movement. Also for the first time in Chinese history, the impoverished countryside is seeing wealth creation on the back of migrant labor.
Fourth, there are no communist believers. There is a legacy communist government framework in place that is slowly changing with economic growth. The faustian bargain is don’t challenge the ruling party’s right to rule, and the ruling party will largely allow you to get rich.
For the future, I think China will continue to improve at a pretty good pace. One can argue whether it is fast enough or far enough or in the right direction, but overall it’s good positive improvement.
The one thing people should be worried about is massive holdings of cash and USD at the same time that the US has massive consumer and government debt. Look for more Lenovo/IBM style deals. Don’t be surprised if a Chinese company buys Ford. And it will be different from the Japan experience because the Chinese are not buying inflated assets at the top of the market. Rather buying at least at a decent price, and then leveraging synergies with cheap labor in China. More hollowing out of the US economy. I don’t see it as evil or a conspiracy, but rather a country that has saved money buying up the assets of a country that has done the opposite.
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I think you are correct-but nobody in the non-working ruling elite here 9like the Bushes or Kenndy family) knows (or cares) about this. They live fat and happy on non-taxed municipal bonds, so it is nothing to them that there are no more industrial jobs left in the USA. When the Chinese own FORD and GM, they will produce EVERYTHING in China-and we will work in McDonalds for $4.00/hour.