Who will tell the people?
China’s manufacturers and retailers have reported declining confidence
about sales with more companies cutting jobs in the period.
This represents a seventh straight deceleration in growth and
potentially the weakest annual expansion in 22 years.
I have lived in China for 15 years. What I have seen is nothing short
of the greatest economic expansion the planet has possibly ever seen.
The boom came out of the bust of the government planning of the 1950′s
and 60′s. Starving 50 million people makes you re-think that you might
not actually know how to run an economy. The shackles came off in 1978,
universities, towns, villages, cities, and even the military were told
to go start businesses as the government could not support them.
The government could not support anyone, they were broke and clueless.
It was up to the Chinese people themselves. This Chinese wave of free
market economics is what unleashed the massive economic gains in China
and pulled hundreds of millions out of grinding poverty.
I saw some horrible stuff back then. I once had a taxi driver in Shenyang
offer to arrange the purchase of a North Korean slave for me back in 1998
when the famine in North Korea was at its heights.I once knew a pair of
brothers who shared a single pair of pants. This meant that they had to
rotate days when only one of them could leave the house. This is the kind
of poverty that results from Communism and its something the world should
Today, times have changed, the guys up in Beijing have become arrogant with
economic success. Suddenly patting themselves on the back claiming that
their system of state planning is the new model. In reality, Beijing never
really had much control over the economy. You needed to work with local
governments, not Beijing. And for the most part, you were left alone and
encouraged to grow your business.
Today, the government clings to a weak RMB policy which stokes inflation and
encourages investment in the areas they don’t need, namely plants and equipment.
The so called “ant tribes” of jobless or very low paid white collars are paying
the price for this imbalance as the service sector is retarded at the expense of
sending more goods to the U.S. to a country that pays China back in printed fiat
Today, the government continues to keep loan rates at 9% all but choking off
businesses. And they are now in the game of price control as they promise to keep
home prices low, killing off the market for 3 years running now as draconian rules
against property ownership remain in place.
It’s still a real economy here unlike the West which has become hopeless and will
experience a crash unlike anything they have seen since the Great Depression.
It’s not to late to salvage China’s real economy if the leadership can once
again be a champion of free markets.
One thing we saw in the recent Japanese protests were several signs about how the
U.S. should pay back their debts to China. Why should a nation with hundreds of
millions still living on a few dollars per day loan the rest of the world
$3.2 trillion dollars?
What happens when people wake up and realize they have been turned into automotons
working 12 hour shifts, 6 days per week in order to send goods to an American
public who won’t work and just prints the money they need?
Who will tell the people?