>> |
02/11/10(Thu)22:10 No.131429> the end result is more money in the state coffers,
allowing China to invest in more development
It may be
hard to visualize, but this is basically a giant pyramid scheme:
1.
Revenues increase(either through increased tax revenues or imports) 2.
Revenue is invested in yet more capacity(factories, buildings, schools) 3.
More economic input is needed to man and supply said factories,
buildings, schools 4. More capacity makes GDP increase: more revenue
therefore more investment, more input, more GDP, ad absurdum
The
cycle can last as long as there is more input(in the form of workers,
capital, and raw materials) into the economy. It is an exponential
process, i.e. it keeps requiring exponentially more input to generate
the same amount of output as before. China's massive resources allows it
to continue this process forever(and also allow other East Asian
economies to ride along for a while) but it will collapse in the long
run.
Ok, I have said a lot of hyperbole which I should not have.
China has a bright future, so does every other country. But the
fundamental problem of the Asian growth model remains, and it will have
to be addressed. Maybe China will find a way out, maybe it won't. I
believe the Chinese are smart enough to figure out how, but not under
its present political system which will adhere to the cycle until the
bitter end. |