< HOME  Monday, October 23, 2006

It's the Chinese Economy, Stupid!

While the United States is pouring its lives and riches into the sands of Iraq, combatting a make-believe "global network of terror", the real threat to America's way of life comes from another quarter -- the galloping Chinese economy.
China's annual growth slowed a little in the third quarter to 10.4 percent, but the world's fourth-largest economy is still firmly on course to log a fourth consecutive year of double-digit expansion

The slowdown, from 11.3 percent in the second quarter, followed a concerted campaign by Beijing to prevent a credit-fuelled investment boom from turning into a bust that could saddle the nation's banks with fresh bad loans.
Of course China is starting from a much lower base than the US economy, but double digit growth compounded over five or six years will make up a lot of ground very quickly. And the US economy is basically standing still, with three or four per cent growth once every fifteen or sixteen quarters considered a major achievement.

The "concerted campaign" mentioned above is an interest rate squeeze designed to slow down "fixed asset investment", which has been "the main engine of China's growth." the U.S. hasn't had that problem in a long time, as its economy is now largely consumption-led, not producer led.

Here are some numbers that make the issue plain as day:
Other data showed investment in the first nine months of 2006 in urban areas in flats, factories and other fixed assets expanded 28.2 percent from a year earlier, slowing from growth of 29.1 percent in the January-August period.

Industrial output growth in the year to September rebounded to 16.1 percent after a surprisingly steep drop to a 15.7 percent rate in August. Retail sales in September grew 13.9 percent from a year earlier, up from 13.8 percent in August.
"Fixed assets" means, among other things, new factory openings, which grew at a rate of 28% in China last year. US factories may have closed at that rate last year!

Of course the Bush administration is aware of all this. They are trying to head off the Chinese challenge by cornering the global supply of oil. Now that that foolish attempt has failed, wouldn't it have been better to put some of the trillion dollars we'll spend on the war into an effort to make our own economy sound?

After all, we live on bread, not bombs.


At Monday, October 23, 2006, Blogger Frederick said...

I wonder where billions in alternative energy development could have got us...

At Monday, October 23, 2006, Blogger borkafatty said...

for real frederick for real.

This is what happens when you vote in a dumbass to run a country. He's running it alright right into the ground.

so sit back and stay debt free and enjoy the ride cause we have not even gotten to stage Ugly yet.

Our grandchildren are going to hat us.

At Monday, October 23, 2006, Blogger borkafatty said...


At Monday, October 23, 2006, Blogger qrswave said...

thanks, for the important post, bob.

I have to disagree, however, the chinese economy is NOT - nor should it be perceived as - a threat to anyone.

The only 'threat' to America, and all of humanity, is the insatiable greed of monopolists and bankers (more often than not, one in the same)

In fact, I reject the whole premise that human beings live, or should live, on this earth with the purpose of competing with one another, as the greedy monopolists who control most of the world's resources would have us believe.

That whole notion is a colossal scam, designed to keep people working against eachother rather than working together so that everyone can enjoy life.

The whole world is being duped and primed for the slaughter.

At Monday, October 23, 2006, Blogger bobw said...

QRS, you've hit on my favorite theme: the myth of scarcity! That's what keeps us all running like rats in a cage, and it isnt necessary. if we cooperated, there's (nearly) enough for everyone.
By Chinese "threat" I merely meant as perceived by the bankers and monopolists.

At Tuesday, October 24, 2006, Blogger qrswave said...

that's precisely the meme we must break away from - for as long as we see the world through their greedy little eyes, we'll be forever foreclosed from a solution.


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