What’s the matter with China?

Fareed Zakaira, AKA Farside Zakaria, found an acorn in today’s column on China.

Basically, he asserts China faces an economic crisis. The hypothesis goes like this:

  1. China’s economic growth will slow because their economy has become so large. The sort of GDP growth seen in the last three decades, which also happened in Taiwan, South Korea, and Japan, will revert to the mean.
  2. China has worked through its population bubble and labor costs will increase; there will be fewer new workers in the demographic pipeline due to the one-child policy and the aging of the existing population.

These economic problems may drive political problems for China’s leaders. And political problems in China tend to have brute force solutions.

The Japan analogy, when further unpacked, seems spot on. Remember when the U.S. feared Japan who was thought to be destroying U.S. automobile manufacturing, buying all the good real estate (Rockefeller Plaza, Pebble Beach, etc.) and U.S. culture businesses (MCA, Columbia Pictures, CBS Records), etc.? Well, consider that the Chinese just bought AMC.

But ignored by Zakaria is this: there is a world-wide production glut of almost everything except oil. The U.S. generally has all the t-shirts, fishing poles, Nikes, DVD players, flat screens, and the likes it needs (watch Storage Wars if you don’t believe me) for a long time, so who will buy the stuff China makes?

If anyone, it will be developing nations—and internal customers—who historically have received less Chinese government attention. Additionally, since big-ticket items like cars and trucks are better than they’ve ever been, lasting longer, becoming safer and more reliable, and becoming obsolescent more slowly further reducing demand.

And what does the United States need? Food, shelter (at a national level we’re probably OK on that), clean water, fuel, and the pursuit of happiness.

So is China turning Japanese?

Turning Japanese economically, that is.
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About Professor Mockumental

I enjoy almost all forms of parody, buffoonery, and general high-jinks. Satire has shown itself to be an essential societal need; I therefore humbly offer my services in such a manner. I enjoy mocking the usual suspects at the New York Times (Charles Blows, Moron Dowd, and the earth is flat guy) and Washington Post (Dana Milkbag, E.D. Dijon, and David Ignoramus). There are many others as well, but sadly, there are always too many targets and too little time.

Posted on May 24, 2012, in Uncategorized and tagged , , . Bookmark the permalink. Leave a comment.

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