Comments on: China As The New Japan

By: Streaker

Streaker — Tue, 03 Mar 2009 06:43:26 +0000

The first link is bad.

By: Kevin C

Kevin C — Tue, 03 Mar 2009 03:37:26 +0000

Wow, never quite thought of it this way. Funny thing is, I clearly remember all the wailing about Japan in the 70′s and 80′s. I remember their economic collapse of the 90′s, but I never connected the two. Makes perfect sense and illustrates why I could NEVER be an economist.

Where it gets REALLY interesting is this: If China makes the same mistakes, what does it DO when the seemingly inevitable collapse comes? War? Against whom and for what? Or does the current global morass defuse the potential Chinese situation, allowing the building economic problem to subside a little (or a lot)? And how much of it depends upon what The Obamination does?

By: David W.

David W. — Mon, 02 Mar 2009 23:48:27 +0000

Well, looking up some numbers – China currently has ~$1.5 Trillion in Treasuries. The total ’09 budget for the US Navy and Marines is $150 Billion/year – and most of that is salaries, which presumably could be much lower for China. Surely, if China wanted to use that money for deterrence, they’d do better to buy themselves a navy? 10+ years of funding ought to be able to produce something of note!

For that matter, if we’re assuming a state of war, why couldn’t we declare that bonds belonging to China will not be honored, cutting their resale value to zero, and use that profit to compensate the American owners of Chinese companies, pay for the war, and have a nice bit left over?

No, I can believe that we might decline to go to war with China because of their army and navy, or because of their nukes, or even because we want to keep doing business with the 3rd/2nd largest economy in the world – but not because we owe them money. Traditionally, owing a lot of money to foreigners is likely to cause war, not prevent it (e.g. Hitler and the Treaty of Versailles).

By: Dr. T

Dr. T — Mon, 02 Mar 2009 23:14:57 +0000

You are assuming, without evidence, that China’s purchases of U. S. government securities and bonds are for making money. I believe that the Chinese government wishes to hold a huge portion of U. S. debt for a more dubious purpose. Specifically, if China decides to conquer Taiwan or the Spratley Islands or Southeast Asia or Indonesia, then it might keep us from interfering by threatening an economic calamity. Dumping all its U. S. holdings would cause the dollar to plummet and would have other adverse affects on the bond market and on international investments. Combine that with the threat to expel all Americans and take over all American-owned companies in China, and our future President might be cowed into doing nothing while China starts gobbling its neighbors.

By: Another guy named Dan

Another guy named Dan — Mon, 02 Mar 2009 20:21:58 +0000

I had an insight about the Chinese economy not long ago. It seems to me that rather than thinking of it as a machine designed to export goods, it’s more a machine to import cash. This seems to me to be the latest in a series of less than completely successful attempts to make them appear to be the strongest nation on earth, something of a holdover of the cultural inferiority complex the nation has had since the colonial period.

As they realized that having a large land area under control and a large population were not sufficient to be seen as powerful, they then tried to develop an ideology they could export to be seen as a great nation. When that didn’t work, they tried to develop a large military, including nuclear weapons. When that still left them seen as a distant third place, they began to attempt to accumulate huge stocks of capital, thinking that that would be what would make them be seen as a great power, peaking with the 2008 Olympic spectacle, spending huge sums of money primarily to demonstrate simply how wealthy they were.

It will be interesting to see where they go now, since this too seems to be insufficeint fot them to be seen as a great power.

By: Richard Sharpe

Richard Sharpe — Mon, 02 Mar 2009 20:01:48 +0000

I seem to recall China going on a buying spree to buy up the rest of the world using those US dollars they are holding. They are worth lots more now that the EURO has gone down.

Never underestimate the ability of people to find clever ways out of their problems.

By: cas

cas — Mon, 02 Mar 2009 18:07:09 +0000

I agree with Billy, it’s not as if the Chinese consumers have an alternative to their government’s policy. How can they make their displeasure known, without ending up in “re-education” camps? Or worse, their families will be sent a bill for the bullet used to silence their criticism…

By: Billy Ruff'n

Billy Ruff'n — Mon, 02 Mar 2009 16:44:44 +0000

[quote]…but it just flabbergasts me that the Chinese taxpayers and consumers see fit to subsidize lower prices for our consumers…[/quote]

Warren, I agree completely, but what choice do they have?