Tuesday, February 9, 2010

More "Chinese Century" Skepticism

  • Joshua Kurlantzick counters "some of the most important foreign policy thinkers [who] have chronicled America’s decline, and argued that Asia is rising to preeminence," — Dazzled by Asia. Rather, the author argues, "predictions of America’s decline are vastly overstated" and "Asia is indeed increasing its economic footprint in the world, but it still lags far behind the United States in military might, political and diplomatic influence, and even most measures of economic stability."


  • China's "$2.4 trillion of reserves is a bubble all its own," says William Pesak calling it "an Asia-wide phenomenon" and suggesting "we should stop viewing this monetary arms race as a source of strength" as "it’s fast becoming a bigger liability than policy makers say publicly" — The Next Bubble. Rather, the author suggests, "it’s a massive and growing pyramid scheme,"
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    3 Comments:

    Blogger xavier said...

    Joshua:

    I share this skepticism. I read Perman's article last week and I concour with his assesment that the 2,5 trillon$ that China has is 'worthless' because it's not being used to better the country's infrastructure or needs of the population.
    As you know from my previous comments, the regime will soon have no choice but to spend that money on pensions etc.
    Further, I read this week and interesting story about the 'ant hills' Grad students who come from the countryside and small towns to Beijing and live in ultra small apartments. They argue that better to live in Beijing than die in a big house in their hometowns.
    There are 24 million of them

    The article claims that they don't represent a threat to the country harmony. Maybe not but the regime faces 2 new headaches:
    1) The brain drain from the periphery to the centre will cause the former to stagnate and slow China's alleged breakneck growth
    2) More seriously the periphery will be emptied out causing a security problem because the neighbours might cast a covetous eye on the vast empty lands.

    The regime wilkl then be faced with a serious dilemma: given the ugly legacy ofthe Cultural revolution where people were exiled to rural ares, the regime can't force the grad students to stay at their howmtowns, so they'll have to spend those reserves to make living in the peripheral areas as attractive as Beijing and the costal cities.

    xavier

    11:37 PM  
    Blogger Mark in Spokane said...

    Don't forget the gender imbalance caused by China's one-child policy and a cultural preference for male offspring.

    2:13 PM  
    Blogger Benedictus said...

    I'm a neophyte in the realm of monetary policy, but my limited reading of Austrian economics convinces me that any monetary policy not backed by the gold standard is a pyramid scheme. China's is no different. It's a big house of cards, really. Am I full out to lunch on this? Maybe, and am anxious to be corrected if I'm wrong, but I have been somewhat cautious about the claims we make about future Chinese economic supremacy.

    9:17 AM  

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