China’s hope: the consumer economy is quietly growing

China’s hope: the consumer economy is quietly growing

Postprzez yoshin » Pt lis 04, 2016 3:24 am

Rowan Callick,
The Australian
Re: China’s hope: the consumer economy is quietly growing, The Australian, 3/11/16

Your article (which I have outlined here) highlighted indications of China’s efforts in both global and Asian contexts to re-establish a controlling role like that it had in Asia as the ‘middle / coordinating kingdom’ prior to Western expansion (ie by engaging business and political leaders from other parts of the world in exploring economic and global governance options that China’s unaccountable authoritarian regime would initiate and control). Other indications of such efforts are on my web-site at Creating a New International 'Confucian' Financial, Economic and Political Order.

However I noted your observation about the continued escalation of China’s debt levels – and, in the absence of any serious political effort in the Western world to defend the liberal -international order, debt may be what stops China’s current ‘soft power’ bid for global economic / political dominance.

The neo-Confucian methods that China has used to engineer ‘real economy’ miracles since the late 1970s do not involve resource allocation with a view to ensuring return on / return of capital (as decisions are based on elite consensus about increasing market share /cash flow rather than financial calculations). And though economic growth is now occurring in China mainly through enterprises that are not state-owned, it is likely that their growth is also being facilitated by a similar process (see indicators in China’s Problem is Neo-Confucianism Not ‘State Capitalism’). As you noted President Xi is emphasising the maintenance of complete state control. China’s education system is apparently seeking to create a compliant population. And supposedly ‘private’ enterprises in Japan’s ‘non-capitalist market economy’ were able to be developed very rapidly (until the late 1980s) by its neo-Confucian economic and financial bureaucracy (ie MITI and the MOF).

Your article indicated that China now seems to be using similar methods to boost the role of services on the supply side of its economy and the economies of those (especially in Asia and emerging economies) who are prepared to accept the role of political ‘tributaries’. This can be expected to have an effect in the services sector similar to the de-industrialization that Europe and North America experienced in the 1960s and 1970s as a result of the post-WWII development (initially by Japan) of cheap supply-side capabilities in mass-production manufacturing. After the de-industrialization challenge to Europe and North America was recognised, market liberalization strategies (which reduced political obstacles to economic change) were used to speed adjustment into new higher value-added sectors, mainly services (ie the sectors that are now potentially subjected to a new ‘de-industrialization’ threat). Market liberalization tactics were and remain an inadequate response – for reasons suggested in Defects in Economic Tactics, Strategy and Outcomes (2000+).

Apart from chronic Western ignorance of the nature of the challenge and of better policy options, China’s main constraint is that (while neo-Confucian methods can be effective in engineering ‘real economy’ miracles) they can’t do this without creating ever-worsening domestic balance sheets, both in China and probably elsewhere. China’s efforts to overcome its balance-sheet constraint by using the methods that worked in generating ‘real economy’ miracles to achieve real estate and stock market booms over the last few years did not seem to work (see Importing Risks from China).

Politically Western societies’ ability to now mount any effective defence of the post-WWII liberal international order seems weak to the point of non-existence.

Why: Political infighting is widespread as is a desire to withdraw from global engagement. The latter would leave the field open to China to take a ‘middle / coordinating kingdom’ role (as your article indicates that it is increasingly doing). The Obama administration in the US sought as part of its Asia Pivot to establish a Trans-Pacific Partnership (TPP) as a future oriented framework for economic activities in the Asia-Pacific which would exclude China. Both US presidential candidates have now indicated that they would not support the TPP. Both are also keen to challenge China – but would seem unlikely to do so successfully. Clinton would reportedly try to do this by legally enforcing international agreements against a Chinese regime who: (a) seem intent on displacing Western-style ‘rule of law’ arrangements with a ‘rule of man’ international system; and (b) showed scant regard for the international legal systems in relation to China’s South China Sea expansion. Trump would reportedly impose high tariffs on imports from China at a time when: (a) the main competitive challenge that the US is likely to face is in ‘services’ (rather than ‘goods’ to which tariffs can be applied); and (b) China is not only seeking to engineer a ‘supply side miracle’ in its service industries but to boost service supply capacity in other countries to boost incomes and thus create stronger markets for its goods and services outside the US and Europe.

However, even though there do not currently seem to be any prospects of effective political challenges to the ongoing rise of China’s illiberal rule-of-man system, public recognition of the problem is likely to eventually encourage a serious response (eg perhaps along the lines suggested in Making Democracy Work Again).

John Craig
Centre for Policy and Development Systems
CPDS supported leaders developing enterprise, economic, community and governance systems
Visit CPDS website - which addressed local and global issues from the perspective of Queensland, an Australian state

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Dołączył(a): Wt lip 08, 2014 9:59 pm

Re: China’s hope: the consumer economy is quietly growing

Postprzez Jerzy Ulicki-Rek » Wt lis 08, 2016 7:12 am

It may sound a bit strange but after years of watching the situation in China from outside and inside as well I do believe that currently ruling group of people -no matter what do they call themself-is the only power to protect Chinese culture,history and tradition.
I do honestly believe that without those people (even if they call themselves "communists") China will face the same fate as others countries:rule of mediocre political whores ready to sell their arses to a higher bidder.
Middle class is growing in China very fast.
In 2012 during Chinese new year we didn't have any problems with parking.
One year later,few months before my arrest taxi driver was lucky to squeeze his way in between two rows or private cars.
So long as long China doesn't want be a "democratic" country like Iraq,Libya,Afghanistan or Syria we can sleep without any worries.
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Jerzy Ulicki-Rek
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Dołączył(a): Wt lis 06, 2007 2:10 pm

Powrót do . Another look at familiar issues

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