So many peple with so little understanding of economics , especialy world economincs.
Let me tell you this : China is walking a very thin line here.China, as a whole, might overtake the US economy tomorrow if they want.Its not that
hard.What is really hard to estimate is the impact of China economy growth, even if its 1%, 5% or 15% per year.
The real issues is the volume of money they are able to get from selling on markets.And since their national market is really really small compared to
international market, they need to sustain the growth by selling more and more to US, Japan, EU, Canada, Australia, countries were people CAN afford
to buy the huge volume of chinese products.
So, in other terms, since the chinese products are cheap (and they will have to keep it cheap, so they can sell more and more), and the westerns
product are like 5-10 times more expensive (since western wages are far far more higher than chinese wages), every percent of Chinas growth will have
to be sustained by selling MORE or INCREASE the selling prices.
However, since they actually cannot increase the prices to match the western prices of a product, because than they will have a real competition, and
actually LOSE in volume of sales, they have to manufacture more, but also make possible to sell as much as they produce.
In other words, any country that will allow MORE cheap chinese products on their markets, will actualy drove into bankruptcy any of they national
company that makes same product.
Or...in order to compete with cheap chinese products, those nations will have to rethink their wages.
It is spiral that will lead to either lower wages in west (if the chinese products cannot be limited to import, and also to compete with them) or will
lead to a colapse of China economy (if those nation can limit the imports of chinese product, hence lowering the income of China and the increase of
unemployment in China).
In order to keep their growth, China MUST sale more cheap products on external markets, or INCREASE their national wages so that they can sell more
and more on their internal market.First option means unlimited acces to external markets, and any country that will accept that will be faced with
higher and higer uneployment (and no sane western goverment will accept that), and the second option will mean more and more chinese out of powerty
into middle class (and no sane comunist government will want a trong middle class).
In the end, it will be EITHER China (and India, because they also have a HUGE human woking power) increase their people richness OR the west will have
to decrease it (because no western economy, assuming free imports of cheap chinese goods, can be competitive with actual wages).
I , for one, beleive that China will colapse, because the other option is the colapse of the West.And the colapse of the West is not acceptable.
You and i know that China have NO military power to impose anything.But the West have it.And we will use it, if our economies will have to compete
free chinese products.So, the West will limit the chinese imports, and China will have to live with it.Or die with it.
edit on 25-4-2011 by
Recollector because: gram
edit on 25-4-2011 by Recollector because: gram