Wednesday, August 26, 2015

Re: China

On Tue, Aug 25, 2015 at 7:05 PM, <larry.r.trout@l> wrote:

'To understand China's predicament, Mr. Dollar compared its experience with some of the best known stories of successful economic development of the last half-century: Japan, which reached China's income level per capita in the early 1970s; Taiwan, which passed this threshold in the early 1980s; and South Korea, which hit it around 1990.

What is most striking is not how all three countries followed quite similar paths, but how China's trajectory has diverged from the others'.

Household spending was always the main source of demand in all three, declining gradually to about 50 percent of gross domestic product when they were about as rich as China is today. Investment rates, which rose sharply in the early stages of their development, peaked at that time at around 35 percent of G.D.P.

By these metrics, China's economy is upside down: Consumer spending by households is only 35 percent of the nation's G.D.P. — one of the lowest levels in the world. Its investment rate — nearly 50 percent of G.D.P. — is extraordinarily high. And the productivity of this investment is dismal.'


​China is one of the worst countries in the world about letting workers keep the fruits of the labor.  Factories, many of which are owned by the military, pay low wages.  Farmers are paid for their commodities submarket prices fixed by the government.  The government is essentially stealing from the poor.

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