Chinese economy
mark94
Arizona
The Chinese economic model, developed in the 1980s, and implemented beginning in the 1990s, is simple and flawed. China decided it would use its huge, cheap workforce to become the manufacturer to the rest of the world. That simple strategy has let them grow around 8% per year for decades.
Here are 4 flaws
1. They never built a mining or energy or agricultural base to supply raw materials. They rely on imports for their raw materials. If the world ever turned against them, say in retaliation to military aggressiveness, the Chinese economy could be shut down in a matter of weeks.
2. At some point, the excess cheap labor in China was going to disappear. That’s happening right now with companies moving their manufacturing to SE Asia and India.
3. Building a modern economy from scratch, especially in a centrally planned economy, requires massive capital. Eventually, the debt burden would be unsustainable. China has also hit that point with total debt about 3 times the GDP
4. The model required China to steal manufacturing jobs, leaving developed countries with high unemployment and an economy based only on services. No country can, or should, allow itself to be hollowed out in this way simply to get cheaper goods. The USA has awakened to this threat and is fighting back with tariifs and trade demands.
Bottom line, the Chinese economic miracle is coming to an end, with or without Trump. It will be devastating to China but will cause a lesser disruption in the US.
Here are 4 flaws
1. They never built a mining or energy or agricultural base to supply raw materials. They rely on imports for their raw materials. If the world ever turned against them, say in retaliation to military aggressiveness, the Chinese economy could be shut down in a matter of weeks.
2. At some point, the excess cheap labor in China was going to disappear. That’s happening right now with companies moving their manufacturing to SE Asia and India.
3. Building a modern economy from scratch, especially in a centrally planned economy, requires massive capital. Eventually, the debt burden would be unsustainable. China has also hit that point with total debt about 3 times the GDP
4. The model required China to steal manufacturing jobs, leaving developed countries with high unemployment and an economy based only on services. No country can, or should, allow itself to be hollowed out in this way simply to get cheaper goods. The USA has awakened to this threat and is fighting back with tariifs and trade demands.
Bottom line, the Chinese economic miracle is coming to an end, with or without Trump. It will be devastating to China but will cause a lesser disruption in the US.
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11 comments
In the 70's everyone thought Japan was taking over. This decade it was supposed to be China. We'll have to wait and see.
Right now, over 20 Million Chinese have lost their right to fly on airlines because of their score.
If China is allowed a monopoly on high tech manufacturing, it’s game over for the West.
The most visible brand involved in the 2025 project is the massive cell phone manufacturer, Huawei. It’s products, especially 5G infrastructure, have back doors to facilitate Chinese espionage.
Each citizen is incentivized to try and better their life , whereas in other countries you’re incentive is to go along and fit in. Not necessarily conducive to risk taking.
Some countries, like Australia, that have a large part of their economy tied to China will be hit hard. Real estate in Australia is already dropping in prince.
I think a China collapse would have a modest impact on the US. We only export about $100 Million of goods to China, much of it agricultural. Maybe it kicks us into an economic downturn but nothing catastrophic.