Will India and China rise in the wake of a failing American empire?

[Michael Chui]

Originally Posted by Acting Like Godot

So now, this has become an "evil communist China vs good, democratic US" sort of debate.

ALG, you repeatedly characterized the debate in this way despite my attempts to steer it otherwise earlier. This isn't something you can absolve blame for.

Edit: Aaand thread split makes this comment incomprehensible for posterity. Lovely.

[Acting Like Godot]

Originally Posted by SnerpGoodWord

China's horrible governance

I certainly agree that China's governance has plenty of room for improvement. Again, though, I think that it is important to see that governance in the business, corporate and commercial sectors can be quite separate from the issue of political system.

For example, democratic India also has plenty of room for improvement in corporate governance.

So does the USA. I know you will find this remark aggravating but it's true - apart from Parmalat (Italy), the world's greatest corporate scandals all come from the USA. Worldcom; Enron; Madoff; Lehman Brothers; AIG.

And actually, just about all your investment banks have gotten into some big trouble over governance issues, in the past few years. In fact, you could fairly say that all of America's economic woes today were sparked off by the lack of proper governance, over the U.S. financial institutions.

[cacheborn]

Good discussion.

[Acting Like Godot]

Originally Posted by Acting Like Godot

Finally, a small counterpoint to your argument that China's policy is stifling Hong Kong's economic freedom to do business and prosper. To put it simply, your claim just isn't borne out by proper studies.

You can, for instance, look up comparative studies on the ease of doing business, in different countries. Take a look:

(1) A study of 184 countries.

For the purposes of this study, Hong Kong is treated as separate from mainland China). And this study, done in 2010, ranks Hong Kong as the 2nd most business-friendly country in the world.

Note that as of 2010, Hong Kong has already been part of China for 13 years. After being part of China for 13 years, Hong Kong is the 2nd most business-friendly zone in the world - how does this gel with your theory?

It isn't anything new, either. This Wikipedia entry gives the "Ease of Doing Business" rankings (done by the World Bank) rankings for the past 3 years (2011, 2010, 2009). Hong Kong has occupied the 2nd spot for 3 years running.

In comparison, the USA was in 4th place for 2009 and 2010, and slipped slightly to 5th place for 2011. Of course, these are still excellent rankings (4th/5th place, out of 183 countries), and I do not (at all) mean to say that capitalist America is a bad place to do business - that would be absurd.

So I have given you the data for 2009 to 2011. Now here, from Wikipedia, is the data for 1995 to 2008, showing the rankings for economic freedom: Index of Economic Freedom historical rankings - Wikipedia, the free encyclopedia.

(Btw, the research for 1995-2008 was done by two very American organisations - Wall Street Journal, and the Heritage Foundation, in Washington D.C.).

Note that Hong Kong was a British colony up to 1997, whereupon it was returned to China. Prior to being returned, Hong Kong was already ranked as the World No.1 country, for economic freedom (1995, 1996, 1997). After being returned to China, Hong Kong continued to be ranked as the World No. 1 country, for the next 11 years (1998 - 2008).

So this is additional evidence which demonstrates the falsity of your argument - that PRC communist policies and rules have strangled Hong Kong economically. On the contrary, Hong Kong has continued to have a very high degree of economic freedom.

In fact, Hong Kong has ranked higher in economic freedom, than the United States, for every single year that I am able to find data for. (From 1995 to 2008, the US has been ranked in the 4th to 8th places).

[NoJobRob]

Originally Posted by Acting Like Godot

I am, however, a very international financial investor and I will put my money wherever I think it has a good chance of making money. So I pay a lot of attention to data and info about long-term trends etc.

And looking at long-term trends, well, I wouldn't put money in the USA. It's pretty shaky, from that perspective. If you talk about individual companies, sure there are excellent ones - if you talk about a broad-based look, ummm, no, sorry, not the USA.
I'd rather go with Brazil, India, China, Australia, Korea, Singapore.

We're two peas in a pod. Brazil, Singapore, and Australia are on my list of potential countries to move to. With the dramatic shift in wealth that is happening in the world, I think it's wise to be open to moving. I've been building my long term positions in the Australian Dollar, Swiss Franc, and Japanese Yen for a while now to hedge against the potential (total) meltdown of the dollar, while keeping the rest in U.S. dollars to actively trade with. Should the dollar totally collapse, or just keep on its losing streak, my profits in the other currencies will erase my losses in the U.S. Dollar, and even give me a profit.

[Acting Like Godot]

Originally Posted by NoJobRob

Brazil, Singapore, and Australia are on my list of potential countries to move to.

Now, let me say a few things about why I like Australia (as a long-term investment).

(1) High degree of economic freedom too.
(2) Rich in natural resources - gold, copper, zinc, coal, iron ore.
(3) Politically stable; reliable legal system.
(4) Well-developed capital markets (important for foreign investors to get in).

Incidentally, Australia's largest trading partner is ALSO China. (Australia exports all the commodities - copper, iron, steel - which China needs to build its cities, factories, ports, highways, airports etc).

[Focus Driblet]

Originally Posted by Acting Like Godot

Ok, I want to share a few perspectives with you.

I think I sparked off a few sensitivities here. I guess I underestimated the pain I might have caused here, telling Americans - "Actually, I think your country is declining."

If you're talking about Snerp, he (?) only addressed you in the same way that you addressed him. If he feels agitated, it's probably because your tone agitated him.

[Brutha]

It's amazing how much better you do when you don't have murderous communists running your country The Chinese do great economically, just not in China

To the extend that China's problems come from being communist they aren't communist at the moment.
The great leap forward was a very bad idea but the current economic system produced ~10% growth over the last three decades.

The have strong "state rights" that allow Hong Kong to operate the way it does.
China had no dictator but exchange their top leader every decade.
In contrast to the US no top leader got his post through family ties.

[WarrenG]

As an amateur/armchair follower of this topic, I have to agree with ALG on this one. Although, GDP isn't a great indicator as that figure gets fudged to look better in some ways, probably by all countries, and also because different countries count different things into their GDP.

For example, the US imputes profits from people who own a home, because they save money that they would normally spend renting it. IIRC, housing accounts for 14% of GDP (but don't hold me to that), and it makes me wonder what fraction of that is imputed rent profits.

So if you imagine that all countries are fudging their GDP up to look better, the decline/reversal might already be happening, as opposed to growth slowing down in the currently largest economies. For example, the UK saw growth of around 1% last year - and it makes more sense that this figure is fudged up than fudged down!

The question on my mind is, will the US really allow another country to take the #1 spot?

[wolfgang]

Originally Posted by Acting Like Godot

And looking at long-term trends, well, I wouldn't put money in the USA. It's pretty shaky, from that perspective. If you talk about individual companies, sure there are excellent ones - if you talk about a broad-based look, ummm, no, sorry, not the USA.
I'd rather go with Brazil, India, China, Australia, Korea, Singapore.

If you invest with China, isn't that indirectly linked to USA? If the USA couldn't pay back to China, what would happen to investments in China?

[SnerpGoodWord]

The economic nonsense being put forth in this thread is ridiculous. China is not "growing fast" in any real sense. Over the last 60 years it has been one of the slowest growing countries in Asia. In 1950 China and Taiwan were on essentially equal economic footings on a per capita basis. Fast forward 60 years, and Taiwan has per capita production roughly FIVE TIMES that of China. In other words, china's growth has been a painfully slow crawl by comparison both to Taiwan and to the western world. The reason: communism.

And don't believe for a second that China is somehow now capitalistic. That's propaganda, pure and simple and the economic stats prove it.

If you want to post an ACCURATE picture of economic life in China, there's two pictures that need to be shown:

1) Subsistance rice farming



2) Industrial production in the concrete monstrosities that Mao created to pass for cities

[Michael Chui]

Originally Posted by SnerpGoodWord

2) Industrial production in the concrete monstrosities that Mao created to pass for cities

I found these fascinating: China's ghost towns: New satellite pictures show massive skyscraper cities which are STILL completely empty | Mail Online

[SnerpGoodWord]

Originally Posted by Michael Chui

I found these fascinating: China's ghost towns: New satellite pictures show massive skyscraper cities which are STILL completely empty | Mail Online

Don't worry, that's all GDP

I can't immediately think of a better real-world example of the hole-digging fallacy.

[wolfgang]

do other countries owe money to the US because basically the US is trying to police the world? The US borrows money that gets spent on the military and the military is deployed all over the place, almost to the point that countries don't need an army of their own?

and what about resources? if a country is so heavily populated, aren't they going to run out of water? and even if they have been producing or growing economically, the people will not have enough water to drink and keep doing so.

and then, is it that growth in newly industrial developing countries almost have no regulation of waste in the factories and power plants such that it's much easier to make all the product and roads or whatever developing countries do? how sustainable is that?

[Michael Chui]

Originally Posted by wolfgang

do other countries owe money to the US because basically the US is trying to police the world? The US borrows money that gets spent on the military and the military is deployed all over the place, almost to the point that countries don't need an army of their own?

No.

Armed forces: Armied to the hilt | The Economist

[180]

Originally Posted by SnerpGoodWord

The economic nonsense being put forth in this thread is ridiculous. China is not "growing fast" in any real sense. Over the last 60 years it has been one of the slowest growing countries in Asia. In 1950 China and Taiwan were on essentially equal economic footings on a per capita basis. Fast forward 60 years, and Taiwan has per capita production roughly FIVE TIMES that of China. In other words, china's growth has been a painfully slow crawl by comparison both to Taiwan and to the western world. The reason: communism.

And don't believe for a second that China is somehow now capitalistic. That's propaganda, pure and simple and the economic stats prove it.

If you want to post an ACCURATE picture of economic life in China, there's two pictures that need to be shown:

1) Subsistance rice farming



2) Industrial production in the concrete monstrosities that Mao created to pass for cities

I don't like posting in China related topics mostly because its a constant reminder of how poor the American primary and secondary education system is. And I often see Dunning-Kruger's and would rather not waste my breath, but if I'm going to keep my debate skills up, I'm going to respond.

First of all, to cover any questionable ethos, I have studied China, and Chinese relations (graduate level courses as an undergraduate), have visited China and Hong Kong, and have many close friends with influential and powerful ties in China. Yes I'm ethnically Chinese but I have absolutely no allegiance to any country or any ideology it may harbor. In fact, on several occasions I've been questioned and asked to apply as a CIA agent for America to go to China. I would gladly serve my country even if it means gathering intel off of China. I haven't because I would clearly fail the physical test. (lol)

However, your "image" of China seems really misconstrued.

First of all, the attitude about China is like something out of a 1930's McCarthyism book. The inherent dislike and bias against communist ideology isn't exactly perspective of how China is, rather it's a 3rd point perspective that resembles a western post cultural revolution attitude. There are no "murdering" commies. Communism is a philosophy (also have studied) which isn't connotative to "murder", "evil" or "injustice". If you imply that then you would really hate Hellen Keller, who was an active communist supporter. At it's heart it's intended philosophy is to promote equality. On some facet, that's extremely "American" in values. But is communism the right governmental system for people here and now? Certainly not in a era called Y which is also dubbed the self entitled generation.

Second, China is communist only by name. If you've ever been there and/or experienced the lifestyle, in many ways it's more capitalistic than America. The free market economy is incredibly rampant. America has protectionist laws for farmers and subsidizes failing businesses. China rarely if ever does. It's a much more capitalist cutthroat environment. Taxes are lower, there are no "rations" that you would expect from a communist regime. Communism is almost inclusive of a socialist economic agenda. China, having none, isn't really communist. To put it in the simplest terms possible... for a country to be TRULY communist they would need to tax their rich to service the poor. I don't want to be this a discussion on the proletariat but, If you would want to speak on an economic perspective, America has more "communist" governmental devices than China. Including health care, taxes, intellectual property, corporate law, and even the law. But again, that doesn't mean these things are bad. I'd prefer living in a country where I'm protected by medicare than a country to fend for myself after 65.

Third, China is a "fast growing economy". Fast growing meaning... fast growing if you take into recent years. If you take the country as a whole and spread it across it's time of historical inception, then yeah... Chinas freaking slow. But we don't care about what happened 3000 years ago. We could do the same for America, and yeah... America's freaking slow too, it's only the last 200 years did we see "development" in the industrial sense. We're only concerned about the current GDP growth of the last few years, and China is one of the largest yearly GDP growers of the last 10 years.

Lastly I just want to say, having been to China, it's not a bunch of rice farms. All countries have farms. America has farms, Russia has farms, I implore you to find a place that doesn't have pictures of farms. This doesn't mean that all around the place it's like that. I've seen farms in China. YEAH they suck, they have a whole in the floor to crap. But a city in China has those Japanese toilets that have lights and water that automatically cleans your butt. I've been to Korea, Japan, and China. In some ways China is way more advanced than Korea and some parts of Japan. Beijing, Shanghai, even Chengdu are incredible cities of advancement. It blows the "big apple" out of the water...

So I have to ask if you haven't had ANY first hand experience there, how do you know what it's really like? It's like trying to believe a virgin when he tells you what sex is like.

If you don't know, you shouldn't have strong opinions. The fact is, I've studied China well over 5 years and I don't have any strong opinions about China. This is why I get annoyed with China topics, because people with less first and secondary accounts of a country they have never been to, believe they know everything about it.

Look don't take any of what I say personal, because we're all wrong in some way or another. I don't know China 100%. I don't know what's going to happen to the American economy in relation to China.

But the fact is NOW, China is growing and America is faltering. There's no debates about it. You can argue and say, China is only "appearing" to be that advance... but when you realize that a huge majority of the stuff we use is "made in China", what is there to really argue.

[Michael Chui]

Originally Posted by 180

But the fact is NOW, China is growing and America is faltering. There's no debates about it. You can argue and say, China is only "appearing" to be that advance... but when you realize that a huge majority of the stuff we use is "made in China", what is there to really argue.

There is a worthwhile argument that GDP is a bad metric for The Things That Count (TM). But that's theoretical economics and not really fit for this thread.

[SnerpGoodWord]

Originally Posted by 180

Third, China is a "fast growing economy". Fast growing meaning... fast growing if you take into recent years.

I'm looking specifically at the period of communist governance from 1950-present. During that period China has MASSIVELY underperformed their neighbors and any reasonable benchmark.

There's always someone claiming China is "growing" at some astronomical rate, but whenever you look at their actual economic output it's just not true - they're many decades behind all the places they're supposedly outgrowing. It's all a deception - China is always "growing" but never "grown". The whole deception started with Mao, who had to claim "progress" while in reality he was mostly busy murdering the people of China.

As far as a "picture of China" I think it's perfectly correct to show subsistence farming and manufacturing when those are the two largest sectors of their economy by percentage of the population employed. It's the skyscraper in Shanghai that's a distorted view - a PR front put on to fool the gullible as to what China actually is.

[wolfgang]

Originally Posted by 180

But the fact is NOW, China is growing and America is faltering. There's no debates about it. You can argue and say, China is only "appearing" to be that advance... but when you realize that a huge majority of the stuff we use is "made in China", what is there to really argue.

Do you know at what expense this growth is causing to China as related to natural resource people need to live? Are they building coal power plants with no limits on emissions?

How is it that it is cheaper to ship a bunch of oil to China, have something made, like a plastic product, then have it shipped to the US to be bought for quite a mark up for lots of middle men? Is that because the factories and power plants are running wide open, without much care or added expense for being clean or having safe working conditions?

I wonder that China is trying to have a life style that USA has (which might not be sustainable in the long run either). And the more wealthy people there are in China, the more they want to eat like Americans, sadly, and they go down the road of raising more pigs to eat such that each person starts to use more and more water due to their food supply. Also since the population is more dense, a more wealthy population means more people in general are becoming affluent.

And maybe in general USA has been an example of a lifestyle that other countries wish to develop into - while the US probably might not really be a good model for sustainable living.

[WarrenG]

Originally Posted by Michael Chui

There is a worthwhile argument that GDP is a bad metric for The Things That Count (TM). But that's theoretical economics and not really fit for this thread.

Originally Posted by wolfgang

And maybe in general USA has been an example of a lifestyle that other countries wish to develop into - while the US probably might not really be a good model for sustainable living.

Couldn't agree more with these two points - RFK's speech on GDP is right on the money as far as I'm concerned, and the Western way of life isn't sustainable, particularly if countries with larger populations want to get in on it (which they apparently do).

But as Michael says, these are irrelevant to the point of the thread, which is whether China etc are growing larger than the USA in the current economic sense of the word.

[bluegreenguitar]

I'd like to point out that while China has almost 1 trillion (900 billion) in US bonds (Many Eyes : Owners of US Treasury bonds, Oct 2010, $bn), US-China trade balance is 300 billion a year towards China (Foreign Trade - U.S. Trade with China). Maybe it's a symbiotic relationship. The US counts on China to buy bonds, but China counts on the US to buy products.

The nominal GDP of China in 2010 was almost 6 trillion. Exports to US were about 360 billion, so about 6%. US debt is about 14 trillion. China holds about 1 trillion or about 7% of US debt. Numbers don't look so bad. They look big, though.

By the way, look at Japan. Japan has 60 billion trade balance per year but almost the same amount of US bonds as China (880 billion). This is more of an imbalance. No one really talks about this.

And look at UK. Trade is almost the same between UK and US but UK has about .5 trillion $ of US bonds.

That being said, I think the US has debt issues and borrows too much money. Most countries have issues, though I don't know much about them.

Also check out the next 100 years by G Friedman. I don't agree with a lot stuff but it has some interesting ideas. 1. The US (and Turkey) has access to 2 major oceans, a rarity. 2. US has not a had a war on home soil since the 1800s, which helps prosperity. 3. China is geographically unstable because the coast always will be a lot richer than the interior causing an intense gradient (I don't know if this is true, but it's an interesting idea). Just an aside, the other point about debt and trade balances is my main point.

Finally, I believe that there's no reason all nations can't grow economically if they are managed correctly. It's not a zero-sum equation.

[wolfgang]

Originally Posted by WarrenG

But as Michael says, these are irrelevant to the point of the thread, which is whether China etc are growing larger than the USA in the current economic sense of the word.

Are you saying that environmental factors and resources are not part of economic growth?

[WarrenG]

Originally Posted by wolfgang

Are you saying that environmental factors and resources are not part of economic growth?

What do you mean?

[SnerpGoodWord]

Originally Posted by WarrenG

What do you mean?

I think it's legitimate to look at what China has sacraficed to get even the limited economic production they have achieved. For example, the factory I posted a picture of above is from Wuxi, a city inland from Shanghai. The primary cultural feature of Wuxi, aside from ugly Mao buildings, is an ancient canal that runs through the city. Problem is, these days it's little more than an industrial sewer for much of its length:

[wolfgang]

Originally Posted by WarrenG

Couldn't agree more with these two points - RFK's speech on GDP is right on the money as far as I'm concerned, and the Western way of life isn't sustainable, particularly if countries with larger populations want to get in on it (which they apparently do).

But as Michael says, these are irrelevant to the point of the thread, which is whether China etc are growing larger than the USA in the current economic sense of the word.

Originally Posted by WarrenG

What do you mean?

Do you think economic growth has nothing to do with resources or management of the environment?

I think it is relevant to point out that growth can cause environmental stresses and depletion of natural resources that may hinder growth.

The economy is linked to the environment and how it is used.

Resources are quite often part of economic considerations.

So how resources are being managed is relevant to the thread.

I don't know, but have to wonder if China will have real water shortage issues in a decade or so, for example.

If they do, would that impact their economic growth?

[Michael Chui]

Originally Posted by wolfgang

Are you saying that environmental factors and resources are not part of economic growth?

The fact that GDP isn't a great metric is incidental to the fact that most people consider it to be a useful metric. Most of predictive economics come down to this: if people think that X is a strong indicator of Y, then they'll react to Y based on X, and that will cause X to be a strong indictor of Y. GDP is a comprehensive and broadly accepted X.

The point of the thread, on the other hand, is mostly just a pissing match between ALG and whoever disagrees with ALG.

[Acting Like Godot]

Originally Posted by WarrenG

The question on my mind is, will the US really allow another country to take the #1 spot?

This isn't a competition, in the sense of a competition such as two boxers in a ring trying to knock each other out.

Countries, businesses, people - everywhere in the world, they merely want to make money. To make money, they either sell goods or they sell services.
And GDP is just a measure of that. It is a measure of the total value of the total amount of goods and services that a country produces.

Among big countries, Brazil, China and India just happen to have the fastest GDP growth rates, that is all. China has been growing at an average of 10% for the past decade, I think America has been averaging 2% in the same period.

As a result of its continuous, sustained high growth, the mainstream view is that by 2016, China would become World no. 1, in terms of GDP. China doesn't get a special trophy for that, there is no award for "World's Biggest GDP", there isn't any particular need for China (or any other country) to strive for that spot.

It's just going to happen, that's all.

[WarrenG]

Originally Posted by wolfgang

I don't know, but have to wonder if China will have real water shortage issues in a decade or so, for example.

If they do, would that impact their economic growth?

OK I see what you mean. I imagine that would impact their growth! I'm not sure how different countries are likely to be affected by environmental issues - I'm reading a book on exactly that though so maybe I will have some thoughts soon. Though depending on what happens, climate-wise, it's also possible that economic growth will be the least of our concerns...

The point of the thread, on the other hand, is mostly just a pissing match between ALG and whoever disagrees with ALG.

That's a bit unfair, I think the point of the thread is to discuss the topic title, and more people arguing "Yes" than just ALG - look at 180's long and reasoned post. Yes, it's getting a little heated, but threads do that in this forum.

[WarrenG]

Originally Posted by Acting Like Godot

As a result of its continuous, sustained high growth, the mainstream view is that by 2016, China would become World no. 1, in terms of GDP. China doesn't get a special trophy for that, there is no award for "World's Biggest GDP", there isn't any particular need for China (or any other country) to strive for that spot.

It's just going to happen, that's all.

I dunno man, there's no award but there's a lot of pride in Americans at being the most prosperous nation on Earth, and they definitely like "Winning." Maybe they don't look at it the same way.

[Acting Like Godot]

Originally Posted by 180

But a city in China has those Japanese toilets that have lights and water that automatically cleans your butt.

I must elaborate on this.

In Japan, you will meet the most technologically advanced toilets in the world and I think that they are really lovable and cute.

For example, I used one which must have had more than a dozen special features. It had a touch-sensitive control panel (like an iPad) on the wall beside the toilet bowl.

It had, like, 4 different jets to spray water to clean you up. The water comes from different directions, eg if you're female, you can elect for the frontal spray.

Angle of spray can be controlled. Temperature of spray can be controlled. Force of spray can be controlled. There are also modes where the spray will automatically oscillate, so you don't even have to move your butt a bit to get it cleaned.

After that, you press another button, and the toilet bowl will blow-dry your arse. Temperature can again be controlled.

Now if your **** really stinks bad, you press another button, and quite apart from the normal flush, a special vacuum (inside the bowl) will be activated to suck out the smelly air.

Press another button and a puff of scented perfume is released.

After that, a recorded message from the control panel says something, in Japanese. I think it's something along the lines of "Thank you for using me".