June 28, 2010

THE PERVERSITY IS PRETENDING THEY WERE DOIING WELL IN THE FIRST PLACE...:

Why China has reason to worry: The People's Republic may look to be doing well economically, but there are many potholes in the road ahead (Jonathan Fenby, 6/27/10, guardian.co.uk)

[I]t may seem perverse to argue that the leadership in Beijing is worried right now. But worried it is – to the point at which China's prime minister, Wen Jiabao, says his country "will make sure it maintains a sense of crisis". The China bulls might look at that sentence and wonder what Wen is talking about. Even if growth drops in the second half of this year it will still be at 8% or above. After a dip in April, the trade surplus ballooned again in May.

The worry is that after three decades of amazing growth, China's model forged in the 1980s is running out time. The new leaders who will take over from Hu and prime minister Wen Jiabao in 2012 have shown awareness of that in a recently circulated internal document. Their roadmap to 2022, when there will be another leadership change, is sensible and would raise China to an economic level somewhere around that of the US. But if the destinations are clear, the road to them is filled with potholes.

Short term, say to 2012, Beijing faces a tricky task of combining tightening with expansion. It needs to mop up the flood of liquidity and slow down the hectic rise in property prices.

It has to bring the economy back from the runaway 12% growth reported early this year to a sustainable level of around 8% which would create sufficient jobs, keep the population happy and underpin the Communist party's claim to be the only force that can ensure material progress. It needs to rein-in industries whose excess output adds to the perennial problem of over-capacity, but without creating mass unemployment. It needs to guard against inflation and boost wages.

Longer term, the challenges that have appeared over the last three decades get even more challenging – widening wealth disparities, air, land and water pollution, corruption,. land rights, labour movement, backward capital markets, freedom of expression, the relationship between Beijing and the provinces. Three decades on, China needs a new shake-up on the scale of that initiated by Deng.


...exchanging freedom for a GDP per capita under $7k. Their declining demographics and inability to either maintain their current regime or the territory they currently claim mean they face massive upheavals that will come while they are still that undeveloped, pretty much unprecedented for an Empire..

Posted by Orrin Judd at June 28, 2010 5:33 AM
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