A Revalued China

Lestor Thurow makes an attempt at reevaluation of the China economy through study of its component parts–something like I tried in my previous Post; now don’t tell me that he did a much better Job, possibly true, but remember I am very sensitive. His discussion on electricity usage is quite valid. The Guangdong province and Hong Kong example may have been a poor choice, as a huge population in Guangdong was living in truly primitive conditions, while Hong Kong was an extremely advanced economy tied to the Global economy. It is easy to show a good Record when starting from a relative nowhere; check the economy of southern Nevada in the 1930s (Hint: think Hoover dam v. the United States Economy at the Time). The Chinese One-Child Policy must be considered the best venue, as only sharp reduction of Population will bring the Chinese long-term Personal Income Wealth (Hint: the American concentration on Cheap Labor from aboard may be very Short-Sighted). I would not like the Reader to see my Commentary as any criticism of Professor Thurow, who did an excellent Job.

The real trouble with China resides in their failure to develop Internal Markets for their Productivity. The rationale is obvious: why waste the Profits of their expanding Exports on the Cost-laden Internal Market system, which will only put added Pressure on limited Resources and scarce Electricity generation capacity? Current Chinese Rice Production suffers from artificial suppression of Prices, as do other Agricultural Products. Creation of Internal Markets would deteriorate these suppressed Prices, and Inflation would take on real Meaning in Chinese society.

The current Situation limits this impact to the industrialized cities, a convenient Situation for Chinese leadership where they can drain the excess Income of Labor involved in the Export industries. The failure of Internal Market development, though, will leave a primitive Population with primitive Incomes which cannot possibly provide a Substitute Market for industrialized Chinese Production; China becoming ever more tied to the Global economy, and limited in scope to the foolhardy Free Trader policies of the West; sheer Portage difficulties and the lack of adequate Bottoms limiting the Ocean trade–think that We are at 85% Global capacity at this Point. lgl