« links for 2008-07-30 | Main | links for 2008-08-05 [delicious.com] »

July 31, 2008



The Stratfor article is basically wrong about the sources of Chinese growth. Net exports currently make up about 2-3% of annual GDP growth whereas about 8-9% comes from internal investment.

China has taken parts of the Asian export model but there are parts of it that are very different. In particular while foreign direct investment provides very useful technology and capital, most Chinese growth is internally directed. Also, since the late 1990's, China hasn't subsidized industry with low interest rates, and the preferential bank loans that existed in the early 1990's were mainly for social welfare spending.

Part of the reason that China has been less friendly to foreign investment (although it still is rather friendly) is that domestic companies are now strong enough so that the need for FDI is much less than it was a decade ago.

Also rural social unrest is a lot less than it was two years ago. High commodities prices are good for farmers as they are able to sell grain for high prices while the amounts of money they are spending on fuel/fertilizer is capped by government subsidies on oil. Also, the central government is starting to direct payments to local government which have boost health and education spending while markedly reducing corruption.

Also, Chinese officials are only enforcing visa restrictions that have always been there. In particular, you aren't supposed to be doing business on a tourist visa, you are supposed to get a Z employee business visa. If you are a company that is properly registered in China, you can get a Z visa. If you were trying to take the easy way out by skirting the formal rules, well... This is what happens.

One other thing, Stratfor has been predicting the fall of the Chinese Communist Party for the last 20 years. The problem seems to be that they are looking at some small events rather and missing the big picture, and they seem to be starting with the conclusion and fitting analysis to fit rather than the opposite.

The comments to this entry are closed.

My Photo

Global Voices

  • Global Voices Online - The world is talking. Are you listening?

  • Donate to Global Voices - Help us spread the word
Blog powered by Typepad
Member since 10/2004


My book:

Consent of the Networked
Coming January 31st, 2012, from Basic Books. To pre-order click here.
AddThis Feed Button