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Thursday, October 19, 2006


Arthur Eckart

There are often contradictions in China's macro data. The article states China's productivity increased 20% a year in industry. However, over that time, prices of energy and raw materials soared. So, it seems, there were massive inefficiencies to begin with, e.g. high labor to capital ratios, or the economy was really much smaller several years ago. Also, it seems, there continues to be massive inefficiencies, e.g. falling export prices, excess capacity, negative externalities, etc. Nonetheless, both wages and profits are growing at double-digit rates each year. China's GDP growth is high. Yet, saving is high, which seem to imply a larger proportion of China's GDP is being exported, or either GDP growth or the saving rate aren't really that high. Nonetheless, it's possible, China is financing growth through excessive domestic credit, which adds to inefficiencies, if the output data have been accurate. Perhaps, there are incentives to skew data, similar to the Soviet Union system, or it's really a miraculous economy.

Arthur Eckart

Perhaps, a little humor supports my statement above.

Subject: Capitalism 101

Traditional Capitalism:
You have two cows. You sell one and buy a bull. Your heard and the economy grows. You sell them and retire on the income.

American Capitalism:
You have two cows. You sell one and force the other to produce the milk of four cows. You are surprised when the cow drops dead.

Hindu Capitalism:
You have two cows. You worship them.

French Capitalism:
You have two cows. You go on strike because you want three cows.

Italian Capitalism:
You have two cows, but don't know where they are. You break for lunch.

British Capitalism:
You have two cows. Both are mad.

Spanish Capitalism:
You have two cows. You ask the EU for an agricultural subsidy. With the money you get, you open a bar. In the meantime you get your unemployment subsidy. The cows were dead three years ago.

Japanese Capitalism:
You have two cows. You redesign them so they are 1/10th the size of an ordinary cow and produce 20 times the milk. You then create clever cartoon images called Cowkimon and market them globally.

Chinese Capitalism:
You have two cows. You have 300 people milking them. You claim full employment, high bovine productivity, and arrest the newsman who reported the numbers.

Russian Capitalism:
You have two cows. You count them and learn you now have 5 cows. You count them again and learn you have 42 cows. You count them again and learn you now have 12 cows. You stop counting cows and open another bottle of vodka.

Timothy M. Doyle

Ray Lopez

China's GDP data are corrupt. See the thread here: http://tinyurl.com/ykvjtc

Arthur Eckart

I read an article recently that China's GDP surpassed Japan's GDP to become the second largest economy. It may be possible, because China has roughly 1 billion more people than Japan. Another article stated that there were roughly 1 billion people in China earning less than $3 a day. So, 1 billion times $1,000 a year is $1 trillion. It also stated there's a "middle class" of 200 million in China, although it's relatively poor compared to developed countries. So, 200 million times $10,000 a year is $2 trillion. China could have a GDP of over $3 trillion, or perhaps $4 trillion or $5 trillion, which would surpass Japan's GDP. India should also be able to surpass Japan. However, China will need to collect taxes to pay for health, education, welfare, etc. With its large population, it'll need to invest a great deal in human capital. I doubt China, at this point, could adopt a negative income tax for low income workers or provide any significant economic stabilizers, e.g. universal unemployment insurance. It seems, China's policy is to expand as fast as possible, no matter what the cost, because there's no choice, e.g. to prevent social unrest.

Arthur Eckart

Also, I may add, China's economic policy reminds me of Amazon.com's corporate policy of increasing revenue at any cost, which initially resulted in large negative earnings, to build economies of scale and gain market share. Amazon.com became the market leader. However, it's still in a competitive industry and earns little profit.


The Japanese and Chinese economies are roughly similar, if one compares them historically.

The Japanese did exactly the same thing, without a Central Committee guiding it but a democratically elected one-party system nonetheless, to establish itself as a world exporter in the after-war years (post 1950). They also employed a devaluation of currency, in relation to the dollar, to promote exports for decades.

The strategy worked. Why should the Chinese NOT use the same device?

China is like a pressure cooker building steam ... if it can be controlled, so much the better. But, it remains to be seen if the Communist leadership can do just that.

The countryside is fomenting below the cover. The schooling is practically non-existent, as are health services. That cannot go on forever.

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In my region there are many items made of china and I must say it has good market here so if you ask me then according to me they are getting much business and much more profit.


I would like to propose not to hold back until you earn enough amount of cash to order different goods! You should just take the mortgage loans or just secured loan and feel comfortable

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