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China’s Trilemma

China's massive economic reforms, that were announced several months ago, will address all these issues.

Interest rate reform, currency reform and capital account reform. All to be carried out over the next few years.

Reform is necessary. But it must be done slowly and steadily, on our own terms and in our own time. Stability must be preserved.

And as @tranquilium mentioned, it is doubtful that the Chinese government will ever give up full control. The largest banks in China (which are also the largest companies in the world) are all state-owned, they are an essential part of Chinese economic policy.

Thanks for the informative post brother. Just wondering, was there ever impetus or movement to privatise the bigger banks? How different are latter-day opinions with regards to this, when you compare the current scenario and Mao's period.Thanks. @tranquilium Also how do you compare Soviet Banking and the current Chinese model. Absurd question, I know but I'm intrigued. Thanks.
 
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Yep, considering that national champions refers to private corporations who are expected to advanced national interest instead of SoE whose job is advance nation interest.
China wouldn't know what Zaibatsu means, since money has never been translate to political power in PRC. Sure, political power can translate into money, but not vice versa.
China also wouldn't know about Keiretsu because Chinese banks are government owned and while private business owners do establish circles, it never translate into political power nor it is hereditary. Chinese practice gavelkind instead of primogeniture with sole exception of the imperial family. In fact, this is pretty much the exact opposite of what Europeans, Japanese and Koreans do.
Chaebol is similar to Keiretsu. I feel it is necessary to mention again. All these all left over from these countries' feudal history where local powers operates independently from central government. China has its roots in absolutely monarchy. The last time Chinese has a clan dominate politics is first half of the Tang Dynasty, which is in the 700s.
Singapore is a city-state.
Did you intended to list these in contrast with Chinese economic model? Because none of these exists in China and in fact, are anti-thesis to what the Chinese culture would produce.

Now, Fannie Mae actually reminded me of a funny story. I am an electrical engineering whose specialty is power systems. We often talked about the state of power infrastructure in US. Did you know that most of the US power infrastructure is built from 1930 to 1960 where the Federal government is able to exert stronger influence due to war time authorities? Many of state sponsored enterprises in US can trace their roots to this time period and they are responsible for much of US' infrastructure boom around WWII, but by the 80s rolls around, much of these government sponsored enterprises begin to slip back to profit-oriented model. One of the most significant example is the privatization of the US power grid which promised cheaper electricity, but in reality tripled the cost. In fact, a large portion of the US power grid are using 40+ years equipment nowadays with no replacement schedule in sight. I was there in IEEE PES T&D Chicago conference this April and a group of engineers were talking about how they have to special parts for high voltage breakers because the system is over 30 years ago and the parts have long gone out of production. When asked why they don't just update the system with newer technology, they answered, "where is the money"?
 
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China is very special, and has created a unique economy, never seen before in history.


National champions - Wikipedia, the free encyclopedia

Zaibatsu - Wikipedia, the free encyclopedia

Keiretsu - Wikipedia, the free encyclopedia

Chaebol - Wikipedia, the free encyclopedia

Economy of Singapore - Wikipedia, the free encyclopedia

Fannie Mae - Wikipedia, the free encyclopedia / Freddie Mac - Wikipedia, the free encyclopedia


China's development really bears no resemblance to any other economic development model used before. Congratulations.


The Chinese model by its very nature (and name), is a hybrid assimilation of various other models throughout history, specifically tailored for the needs of China today.

The concepts are not new, what is new is the scale.

We are aiming to be the very first developed country in the world with 1+ billion people. The very first.

People said it was "impossible" to sustain double-digit growth for three whole decades.

They are going to have to adjust to the fact that these preconceptions won't apply to China. Due to the sheer scale, we are in brand new territory.
 
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Thanks for the informative post brother. Just wondering, was there ever impetus or movement to privatise the bigger banks? How different are latter-day opinions with regards to this, when you compare the current scenario and Mao's period.Thanks. @tranquilium Also how do you compare Soviet Banking and the current Chinese model. Absurd question, I know but I'm intrigued. Thanks.

Well, I can't tell you much about the Soviet model, because I never really study on it, but while there are talks regarding to opening the banking sector to private investors, there has never been any suggestion on privatization the bigger commercial banks, let alone the central one. The reason is several fold:

1. The first one is the because mentality. Like I repeated mentioned, Chinese culture spent two millennia as absolute monarchy as oppose to Europeans who spent less than tenth of the time in absolute monarchy and way longer in feudalism. I remember a interest talk from Martin Jacques.
He mentioned that unlike European cultures where government is this outside force to be resisted, the Chinese culture believes the government to be patriarch of the family. Personally I think it is very good analogy. Now if we use this analogy, then if the entire nation is a single large house hold, who will control the money? The patriarch, of course.

2. The second one is a practical reason. I don't really need to go into too much depth. Just look at 97 and 08 financial crisis. The OP mentioned 97 southeast Asia financial crisis, the fact is, China maintained has a 7.8% growth in 98 where all other countries involves (Japan, South Korea, Russia, Indonesia, Thailand Singapore, etc) have negative growth, some of them into the negative double digits. The only other Southeast/East country that got out of the crisis with good growth is Vietnam which has a 5.5% growth and it is socialist country just like China. Similarly in 08 where US and European nations dip into negative growth, China maintained a 9.6% growth speed. In fact, judging by the trend, the 08 crisis barely fazed China.
GDP growth (annual %) | Data | Table
This goes to show the resilience of socialist countries granted by their control of their economy.

On the issue of Mao, frankly, there are enough urban myth regarding to him that it can fit enough episodes to make a tv series. To save time, I will just talk about his relationship with Deng's reforms in the 80s.

The Chinese economic reform in the 80s are often regarded as one of the most successful reform in the 20th century. People are often contributing that solely to Deng's brilliance. Hey, it is way easier for western readers to swallow the pill if you pretend the effort is act of a single genius then an inevitable effort from at least two generations of people, because a genius is just a random event and admitting it is from consistent effort would require western audience to acknowledge Chinese actually know what they are doing.

Back to the topic. In reality, Deng's reform in the 80s is neither spontaneous nor conceived solely by him. The reform in the 80s are actually the third such reform in the series, because the first two ended in failure. (Well, the first one ended in failure, the second one sort worked, but didn't quite achieve the effect)

You have to understand that Mao is a utilitarian at heart. Back in the 30s where other CCP members are holding Karl Marx and Lenin's word as gospel, Mao was one that insisted communism must be combined with actual conditions in China. For him and his followers, they picked communism because it offers the best tools to strengthen China and if the original principles doesn't suit China's needs, they have no problem tossing it out of the window. Heck, it is joked that if divine intervention is actually the best way to run a country, Mao would probably convert to theocracy. As a result, while PRC sticked mainly to planned economy in the first decade, it is purely out of necessity. The background of this choice is that when PRC is founded, it was a war torn land that has not see peace for close to a century already with no infrastructure, no education and no money to work with. Under these conditions, planned economy is necessary because you need to concentrate on whatever you have to build the barely essentials.

By the 60s, the worst time is already over. With basic infrastructure and education under its belt, China set about developing things more than the bare necessities. As a result, the first round of reform comes in August, 1964 aiming to establish economic-oriented management in industry and transportation in 12 testing grounds around the country. However, due to lack of experience and preparation, the result ended in economic chaos. The reform is subsequently aborted in 1965. The second set of reform came around the end of 1971, where the reform aimed to address inefficiencies in agriculture due to over rigid structure. This reform would later lead to the country-side reform in land ownership in the 80s. Unlike the first reform which caused economic chaos since it is overly aggressive, the second set of reform generally worked as intend, but it is overly conservative, so it didn't create enough impact to truly change the Chinese economic structure.

After an aggressive failure and an conserve non-impact, Deng's reform came in the 80s as the third reform in the series and the rest is history.

Basically, Deng was able to do what he did in the 80s because Chinese people has spent over a decade of time experimenting and testing different approaches to the reform and their collective effort yield result and create one of the greatest economic transformations in 20th century.
 
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Yep, considering that national champions refers to private corporations who are expected to advanced national interest instead of SoE whose job is advance nation interest.
China wouldn't know what Zaibatsu means, since money has never been translate to political power in PRC. Sure, political power can translate into money, but not vice versa.
China also wouldn't know about Keiretsu because Chinese banks are government owned and while private business owners do establish circles, it never translate into political power nor it is hereditary. Chinese practice gavelkind instead of primogeniture with sole exception of the imperial family. In fact, this is pretty much the exact opposite of what Europeans, Japanese and Koreans do.
Chaebol is similar to Keiretsu. I feel it is necessary to mention again. All these all left over from these countries' feudal history where local powers operates independently from central government. China has its roots in absolutely monarchy. The last time Chinese has a clan dominate politics is first half of the Tang Dynasty, which is in the 700s.
Singapore is a city-state.
Did you intended to list these in contrast with Chinese economic model? Because none of these exists in China and in fact, are anti-thesis to what the Chinese culture would produce.

If you really believe the sections of your post that I've put in bold, then we'll never be able to agree on anything. I'm sure you think it's pure coincidence that so many political leaders in China had parents who were political leaders, and that so many Chinese political leaders have amassed fortunes. In China, it's hard to conclude that money doesn't translate into political power, since money and political power are essentially inseparable in China.


Now, Fannie Mae actually reminded me of a funny story. I am an electrical engineering whose specialty is power systems. We often talked about the state of power infrastructure in US. Did you know that most of the US power infrastructure is built from 1930 to 1960 where the Federal government is able to exert stronger influence due to war time authorities? Many of state sponsored enterprises in US can trace their roots to this time period and they are responsible for much of US' infrastructure boom around WWII, but by the 80s rolls around, much of these government sponsored enterprises begin to slip back to profit-oriented model. One of the most significant example is the privatization of the US power grid which promised cheaper electricity, but in reality tripled the cost. In fact, a large portion of the US power grid are using 40+ years equipment nowadays with no replacement schedule in sight. I was there in IEEE PES T&D Chicago conference this April and a group of engineers were talking about how they have to special parts for high voltage breakers because the system is over 30 years ago and the parts have long gone out of production. When asked why they don't just update the system with newer technology, they answered, "where is the money"?

The electrical grid in the US is a great example illustrating my point. The companies are privatized, but heavily regulated by the state. Electrical rates in the US are mandated by the government, and cannot rise beyond a certain amount each year. Therefore, companies cannot afford to upgrade equipment at a rate necessary to maintain a well-functioning and efficient grid. The state forces the electrical companies to misallocate capital towards subsidies to electrical users rather than profitable projects, such as upgrading the grid to allow for greater efficiency, or constructing more efficient power plants.

Compare this to the US cellular telephone industry. The players are much less regulated, have much greater pricing power, and have built one of the most advanced networks in the world. China will similarly benefit when the government gets out of the way and allows private enterprise to allocate capital efficiently.

The Chinese model by its very nature (and name), is a hybrid assimilation of various other models throughout history, specifically tailored for the needs of China today.

The concepts are not new, what is new is the scale.

We are aiming to be the very first developed country in the world with 1+ billion people. The very first.

People said it was "impossible" to sustain double-digit growth for three whole decades.

They are going to have to adjust to the fact that these preconceptions won't apply to China. Due to the sheer scale, we are in brand new territory.

If scale is what separates the Chinese model from previous models, I agree with you. If the structure of the economy through time is what is considered unique in China, I would have to disagree. The path of Chinese reforms over time would seem to suggest that China is moving more and more towards the market-oriented model of the West, which is what every other developing country has done, both currently and in the past. Personally, I think China will ultimately embrace the Singapore model, which is a variant of the Western model, but not unique.
 
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If scale is what separates the Chinese model from previous models, I agree with you. If the structure of the economy through time is what is considered unique in China, I would have to disagree. The path of Chinese reforms over time would seem to suggest that China is moving more and more towards the market-oriented model of the West, which is what every other developing country has done, both currently and in the past. Personally, I think China will ultimately embrace the Singapore model, which is a variant of the Western model, but not unique.

Our economic model is called "Socialism with Chinese characteristics" (thus by its name and nature is a hybrid assimilation of various other models). Whereas Westerners tend to refer to our model as "State capitalism".

The most important aspect of our economic model is that it will adapt to changing circumstances.

What worked for China in the last few decades, may not work for China over the next few decades. Hence the huge momentum in the Xi-Li Administration for comprehensive reforms.

We are trying to build a model that works for China at the current point in time, and as Deng Xiaoping said, we will "cross the river by feeling the stones".

It's all about pragmatism, i.e. doing what works. If approaching the Singapore model is what works for us (as seems relatively likely), then that is what we will move towards.

But again, due to the sheer scale, we are in unknown territory. This is inherently very risky, and Chinese leadership tends to be quite averse to risk.

Which is why the urgency of the recent reforms is quite surprising. Our current and ongoing "economic shift" is a very risky time for us, our economic future depends on how well the Chinese government manages to handle these reforms.
 
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If you really believe the sections of your post that I've put in bold, then we'll never be able to agree on anything. I'm sure you think it's pure coincidence that so many political leaders in China had parents who were political leaders, and that so many Chinese political leaders have amassed fortunes. In China, it's hard to conclude that money doesn't translate into political power, since money and political power are essentially inseparable in China.

Let's see, let's skip Mao, Zhou, Deng, since they are born at the turn of 20th century and their parents couldn't be anything but farmers.
Li Peng's dad died early in the war and his mother was head of an orphanage and later a middle school principle.
Zhu Rongji is an orphan.
Xi's father probably held the highest position out of the bunch, but he was actually jailed by political opponent when Xi started his career, so he was actually detrimental to Xi's career.
Li Keqiang's father is a mayor and later a municipal level judge.

Let me know where "pure coincidence that so many political leaders in China had parents who were political leaders". You are modeling Chinese economy using US at the start post and now you are treating Chinese leaders as if they are US leaders. More importantly, you are still not getting past the money---> political power box. This is understandable because it is hard imagine what the other side is like unless you have seen both sides personally.

While political connection is important in just about any society, it is especially important in elective government such as US. This is because political families and its associated connection are required to amass the necessary funds for political elections. Again, this is especially significant in US because US state-level elections are winner takes all. So if you are not among the prominent political parties, then you have zero chance participating in Federal level election. This is farther amplified by the fact that US political parties are exclusive membership, so only selective few can join, thus limiting the field. The Chinese political party is general membership and just about anyone with a good record can join with enough personal effort. Chinese run a much longer selection system where the individual are judged and voted by boards of peers at all levels and promoted on performance base. This means personally skill is way more important because you can't get performance through money.


The electrical grid in the US is a great example illustrating my point. The companies are privatized, but heavily regulated by the state. Electrical rates in the US are mandated by the government, and cannot rise beyond a certain amount each year. Therefore, companies cannot afford to upgrade equipment at a rate necessary to maintain a well-functioning and efficient grid. The state forces the electrical companies to misallocate capital towards subsidies to electrical users rather than profitable projects, such as upgrading the grid to allow for greater efficiency, or constructing more efficient power plants.

Compare this to the US cellular telephone industry. The players are much less regulated, have much greater pricing power, and have built one of the most advanced networks in the world. China will similarly benefit when the government gets out of the way and allows private enterprise to allocate capital efficiently.

I think you missed the part where electricity cost tripled after privatization for customers. If the companies are forced to subsidize users, then the price will go down, not up. Also, while FERC require the price of electricity to be cost-based. In practice, it accept the market price, which is a bidding system from a pool of location power companies. Please don't make up stuff you have no idea about, power system is my profession. I take offense on BS regarding to electricity.

If scale is what separates the Chinese model from previous models, I agree with you. If the structure of the economy through time is what is considered unique in China, I would have to disagree. The path of Chinese reforms over time would seem to suggest that China is moving more and more towards the market-oriented model of the West, which is what every other developing country has done, both currently and in the past. Personally, I think China will ultimately embrace the Singapore model, which is a variant of the Western model, but not unique.

Why would you believe one of the largest country in the world will use a model developed for a city-state? It doesn't make the least bit of sense. Singapore GDP is 26% industry, 74% service and 0% agriculture and out of that 26% industry, 1/5 is pharmaceutical, 1/3 is basic electronics. Singapore's economic model is this way because it is city-state with very limited space and population. As a result, it doesn't need agriculture because import can feed all its needs. It doesn't have a strong industry because it has no place for factory, no population for workers and definitely couldn't have internal supply chain because, again, it is simple too small. Singapore also have essentially no domestic market for both its manufacturing and service. This kind of country typically folds like a cheap deck of card at the slightest breeze, let alone any sort of financial crisis. There isn't a single thing that is similar between China and Singapore outside the fact a lot of Singaporeans are Chinese descendent.
 
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Let's see, let's skip Mao, Zhou, Deng, since they are born at the turn of 20th century and their parents couldn't be anything but farmers.
Li Peng's dad died early in the war and his mother was head of an orphanage and later a middle school principle.
Zhu Rongji is an orphan.
Xi's father probably held the highest position out of the bunch, but he was actually jailed by political opponent when Xi started his career, so he was actually detrimental to Xi's career.
Li Keqiang's father is a mayor and later a municipal level judge.

Let me know where "pure coincidence that so many political leaders in China had parents who were political leaders". You are modeling Chinese economy using US at the start post and now you are treating Chinese leaders as if they are US leaders. More importantly, you are still not getting past the money---> political power box. This is understandable because it is hard imagine what the other side is like unless you have seen both sides personally.

While political connection is important in just about any society, it is especially important in elective government such as US. This is because political families and its associated connection are required to amass the necessary funds for political elections. Again, this is especially significant in US because US state-level elections are winner takes all. So if you are not among the prominent political parties, then you have zero chance participating in Federal level election. This is farther amplified by the fact that US political parties are exclusive membership, so only selective few can join, thus limiting the field. The Chinese political party is general membership and just about anyone with a good record can join with enough personal effort. Chinese run a much longer selection system where the individual are judged and voted by boards of peers at all levels and promoted on performance base. This means personally skill is way more important because you can't get performance through money.

This generation is the first one old enough to benefit from its parents' achievements. The previous ones were born before the modern People's Republic of China.

Princelings - Wikipedia, the free encyclopedia

Not sure what you mean when you say that "US political parties are exclusive membership," which is not true. Any citizen can join any party and run for any office. As far as the selection process of officials through boards of peers, I'll have to take your word for it, but since there is no transparency to the process, we'll never know what kind of negotiations take place. If China really does select officials based on pure merit, then I would agree, it is unique in the world in that regard. And you're right, it's hard for me to believe.




I think you missed the part where electricity cost tripled after privatization for customers. If the companies are forced to subsidize users, then the price will go down, not up. Also, while FERC require the price of electricity to be cost-based. In practice, it accept the market price, which is a bidding system from a pool of location power companies. Please don't make up stuff you have no idea about, power system is my profession. I take offense on BS regarding to electricity.

I am sorry that you were lied to by your American colleagues, but talk of tripling prices is false. If prices went up immediately after privatization to build capital reserves, fine. But to claim that privatization caused a permanent acceleration in electrical rate increases is absurd. I can't find official data back to 1980, but here is official data back to 1990:

Average retail price of electricity to ultimate customers - By state, by provider, annual back to 1990 (Form EIA-861)
http://www.eia.gov/electricity/data/state/avgprice_annual.xls

Over that period of time, average electrical rates increased by 51.7% for residential users, 37.5% for commercial users, 40.7% for industrial users, and 49.8% overall. Over the same period of time, inflation increased prices by 75.7%, which means that real prices actually declined.

I have tremendous respect for your work as an engineer, but to quote you, please don't make up stuff you have no idea about.



Why would you believe one of the largest country in the world will use a model developed for a city-state? It doesn't make the least bit of sense. Singapore GDP is 26% industry, 74% service and 0% agriculture and out of that 26% industry, 1/5 is pharmaceutical, 1/3 is basic electronics. Singapore's economic model is this way because it is city-state with very limited space and population. As a result, it doesn't need agriculture because import can feed all its needs. It doesn't have a strong industry because it has no place for factory, no population for workers and definitely couldn't have internal supply chain because, again, it is simple too small. Singapore also have essentially no domestic market for both its manufacturing and service. This kind of country typically folds like a cheap deck of card at the slightest breeze, let alone any sort of financial crisis. There isn't a single thing that is similar between China and Singapore outside the fact a lot of Singaporeans are Chinese descendent.

Of course China won't be an exact replica of Singapore, but the Singaporean model is not based on its focus on specific industries. The Singaporean model is essentially a free-market economy with heavy government interference, which I believe is the most probably path for China to take going forward. Singapore is export-oriented, and so is China. Increasing labor costs will naturally force China to move away from manufacturing and up the value chain. Indeed, if I recall correctly, the non-manufacturing sector recently overtook the manufacturing sector as a percentage of its contribution to the Chinese economy. Again, it's unclear why you are so hostile to this idea, as China has been moving in this direction for some time.
 
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@Chinese-Dragon @tranquilium
Great posts guys. Basically what you described is precisely what I had thought. That the latter-day reforms were 'perfection' and 'actualization' of things that had been tried before but needed honing at certain levels. The West in search of idealist leaders put the whole credit on Deng. What I don't get is that there's absolutely no acknowledgement in the West about the ground-work that was laid by the previous rulers and the millions of sacrifices that were made. The transformation is something the time of which had come PRECISELY based on those sacrifices and not some magic wand. Thanks:china::china:

On a side note, have you guys read Thomas Piketty. What do you make of him?
 
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There we go again. It is the same misconception about history.

First of all, is Chinese economy "bad" before 80s? From growth perspective, it is not bad at all. The thing is, China or more specifically, PRC started out in 1945 with pretty much zero-infrastructure. It doesn't have the industry to support modern agriculture and it doesn't have the education to build an industry. Yet by 80s China already has a complete industrial base that is capable of manufacturing from aircraft, satellite to small things like electronics, vacuum tubes.

Second, Chinese never used the western model in any of its development stage. The US and European model has legacy in its long feudal history where local nobility holds land independent of the central authority. Industrial revolution simply switched nobility to business owners. While the socialism revolutions in the early 20th century added in many socialist elements to the western economic system, it is still fundamentally the same one that can trace its roots back to Europe's feudalism history. Chinese, on the other hand, has its roots in absolute monarchy where local rulers are merely non-hereditary civil servants selected and empowered by the central government. This characteristic is one of the reason China accepted communism so readily. The philosophy is already there with the Chinese for over a thousand years before Karl Marx is even born.

The economy transition from China in the 80s is merely an intermediate step from a long-series of economy reforms that started in the early 60s and lasted all the way to the present day and private business existed in China ever since the 60s. The reform in the 80s was more obvious because economic development has reached a critical mass. For all these decades, the state owned enterprises has been the instrument the Chinese government used to lead the economy tide as well as anchoring social stability in the troubled times. This is drastically in contrast with the western business which is never controlled by the government since their conception in industrial revolution.

Internet is funny thing. People actually believes that China is capitalistic or follows western economic model. If you actually bother to make in depth analysis of the details Chinese economy model. you will see it is has always been a socialist model. Its "free market" characteristic doesn't make it capitalism because all socialist model besides communism incorporate large percentage of private, profit oriented organizations.

BTW, text book definite of free market economy involves a market without any regulation and interference from government and it doesn't exist except in the 1800s because people quickly figured out a market without rules is just asking for trouble.

Amazing! Thank you for all the analyses. I wish I knew how to give positive rating. A number of posts of yours above deserve it right there.
 
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This generation is the first one old enough to benefit from its parents' achievements. The previous ones were born before the modern People's Republic of China.

Princelings - Wikipedia, the free encyclopedia

Not sure what you mean when you say that "US political parties are exclusive membership," which is not true. Any citizen can join any party and run for any office. As far as the selection process of officials through boards of peers, I'll have to take your word for it, but since there is no transparency to the process, we'll never know what kind of negotiations take place. If China really does select officials based on pure merit, then I would agree, it is unique in the world in that regard. And you're right, it's hard for me to believe.

Well, maybe it is too harsh to call it exclusive membership. I was more referring to the cases in presidential primary and caucuses where the outcome is influenced by media exposure and campaign, which is backed by money,

And we come back to your original argument that political power comes from money. You listed a number of people who have political power and money. Now did they obtain the power first or the money and more importantly, through what mechanism would money put people in power in China? US has legitimate ways for money to translate into power in the form of election campaigns and media coverages, the same mechanism doesn't exist in China.

I am sorry that you were lied to by your American colleagues, but talk of tripling prices is false. If prices went up immediately after privatization to build capital reserves, fine. But to claim that privatization caused a permanent acceleration in electrical rate increases is absurd. I can't find official data back to 1980, but here is official data back to 1990:

Average retail price of electricity to ultimate customers - By state, by provider, annual back to 1990 (Form EIA-861)
http://www.eia.gov/electricity/data/state/avgprice_annual.xls

Over that period of time, average electrical rates increased by 51.7%. Over the same period of time, inflation increased prices by 75.7%, which means that real prices actually declined.

I have tremendous respect for your work as an engineer, but to quote you, please don't make up stuff you have no idea about.

I believe I do owe you an apology. The data I remembered is for industrial power consumption cost from 1970 to 2010 where
http://www.eia.gov/totalenergy/data/monthly/pdf/sec9_11.pdf
Where cost for 1970 would be 1.00, which adjusted for inflation would be 5.62. (cent/KWhr)
and the cost for 2010 would be 6.82.


Of course China won't be an exact replica of Singapore, but the Singaporean model is not based on its focus on specific industries. The Singaporean model is essentially a free-market economy with heavy government interference, which I believe is the most probably path for China to take going forward. Singapore is export-oriented, and so is China. Increasing labor costs will naturally force China to move away from manufacturing and up the value chain. Indeed, if I recall correctly, the non-manufacturing sector recently overtook the manufacturing sector as a percentage of its contribution to the Chinese economy. Again, it's unclear why you are so hostile to this idea, as China has been moving in this direction for some time.

You are right in the aspect to heavy government regulation part, which is a characteristic of socialism and I do believe I have already stated that aside from communism in its most idealistic form, all socialist economy incorporate free trading. Just like only the most idealistic form of capitalism calls for total none-interference and vast majority of capitalistic nation employ varies forms of government regulation and intervention. Basically, totally planned and total free economy only exist as text book example and real world economies tends to sit towards the middle.

On the issue of "export dependent". here are the export vs GDP of several countries (2012):
Country/GDP (billion of USD)/export (billions of USD)/GDP to export ratio
China /8,229/2,049/4.02
United States/16,244.6/1,545/10.5
UK/2,431.6/481.2/5.05
France/2,611.2/556.6/4.69
Russia/2,014.7/524.6/3.84
Germany/3,425.9/1,416.2/2.42
Japan/5,961.0/798.6/7.46
SIngapore/276.5/408.4/0.677
Saudi Arabia/711.0/357.4/1.99
TP_EP_CI
GDP (current US$) | Data | Table

These are data from the five members of UN permanent security council, two well known economic power, a known resource exporter and Singapore. As you can see, China's GDP to export ratio is similar to UK, France and Russia. I do believe that US' unusually high ratio is the result of dollar dominance. Japan, on the other hand, is mainly result of Abenomic really not working, but we are getting off topic.

You can tell from the ratio just how ridicules Singapore's economic model is. It has a ratio of 0.677. In other hands its export is bigger than its GDP. For every other nation, even resource exports like Russia and Saudi Arabia, the export value is nowhere near the national GDP. Sure, export is an important part of China's economy, but it isn't out of line comparing to other major economies in the world. It is definitely nowhere near the level Singapore depends on it.
 
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@Chinese-Dragon and I were discussing this in another thread. The Plaza Accord was necessary because without it, the US would have probably fallen into a severe recession, which in turn would have dragged Japan down. Similarly, China will float the Renminbi because it needs to, not because someone forced it to.

I have to say, this continuing victim attitude on the part of so many Chinese is rather childish. China is soon going to be the largest economy in the world, and to continue growing, China must reform. Not because the big, bad US forces it to reform, but because its leaders know that such reforms are necessary to strengthen the economy.

Feel free to rant and rave about the US if it makes you feel better, though.

Yeah, I have no idea why some Chinese keep ranting about the U.S. To me, the U.S. is just as normal a country as any other country. I don't feel the U.S. that powerful, esp with regard to China. I

I don't think it's the victim attitude though. I mean the U.S. had little to do with China's fall in last 200 years. Maybe it is a mixture of Hollywood and media that portray the U.S. as all powerful and far reaching into everyone's business. Honestly I have no idea!
 
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Well, maybe it is too harsh to call it exclusive membership. I was more referring to the cases in presidential primary and caucuses where the outcome is influenced by media exposure and campaign, which is backed by money,

And we come back to your original argument that political power comes from money. You listed a number of people who have political power and money. Now did they obtain the power first or the money and more importantly, through what mechanism would money put people in power in China? US has legitimate ways for money to translate into power in the form of election campaigns and media coverages, the same mechanism doesn't exist in China.



I believe I do owe you an apology. The data I remembered is for industrial power consumption cost from 1970 to 2010 where
http://www.eia.gov/totalenergy/data/monthly/pdf/sec9_11.pdf
Where cost for 1970 would be 1.00, which adjusted for inflation would be 5.62. (cent/KWhr)
and the cost for 2010 would be 6.82.




You are right in the aspect to heavy government regulation part, which is a characteristic of socialism and I do believe I have already stated that aside from communism in its most idealistic form, all socialist economy incorporate free trading. Just like only the most idealistic form of capitalism calls for total none-interference and vast majority of capitalistic nation employ varies forms of government regulation and intervention. Basically, totally planned and total free economy only exist as text book example and real world economies tends to sit towards the middle.

On the issue of "export dependent". here are the export vs GDP of several countries (2012):
Country/GDP (billion of USD)/export (billions of USD)/GDP to export ratio
China /8,229/2,049/4.02
United States/16,244.6/1,545/10.5
UK/2,431.6/481.2/5.05
France/2,611.2/556.6/4.69
Russia/2,014.7/524.6/3.84
Germany/3,425.9/1,416.2/2.42
Japan/5,961.0/798.6/7.46
SIngapore/276.5/408.4/0.677
Saudi Arabia/711.0/357.4/1.99
TP_EP_CI
GDP (current US$) | Data | Table

These are data from the five members of UN permanent security council, two well known economic power, a known resource exporter and Singapore. As you can see, China's GDP to export ratio is similar to UK, France and Russia. I do believe that US' unusually high ratio is the result of dollar dominance. Japan, on the other hand, is mainly result of Abenomic really not working, but we are getting off topic.

You can tell from the ratio just how ridicules Singapore's economic model is. It has a ratio of 0.677. In other hands its export is bigger than its GDP. For every other nation, even resource exports like Russia and Saudi Arabia, the export value is nowhere near the national GDP. Sure, export is an important part of China's economy, but it isn't out of line comparing to other major economies in the world. It is definitely nowhere near the level Singapore depends on it.

Good information, thank you. I'm hear to learn, and all of you are excellent teachers.

Yeah, I have no idea why some Chinese keep ranting about the U.S. To me, the U.S. is just as normal a country as any other country. I don't feel the U.S. that powerful, esp with regard to China. I

I don't think it's the victim attitude though. I mean the U.S. had little to do with China's fall in last 200 years. Maybe it is a mixture of Hollywood and media that portray the U.S. as all powerful and far reaching into everyone's business. Honestly I have no idea!

Indeed, I understand other historical grievances, but the sheer hatred for the US confuses me.
 
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Do you know why Korean and Japanese words also have Chinese characters? That should explain who copied who.

Good information, thank you. I'm hear to learn, and all of you are excellent teachers.



Indeed, I understand other historical grievances, but the sheer hatred for the US confuses me.

no hatred, Chinese doesn't hate America, so much as you are in our way. Like if I was competing with someone, I don't hate them, but I'm not their best friend either.
 
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