Alls well in the land of dragons...
China..
what laurels are yet to be conferred on this rising dragon from the east..???
the country that from a humble begining of being percieved to be a land of oriental gang wars n tribal feuds...cheap opium and oriental pleasures..
to an economy that is closely followed and endorsed by the whole world. But all is not picture perfect in this eastern chop-suey..
the facts are plain to see..
-China has been growing at roughly 9% a year with an investment/GDP ratio of around 40%. India has been clocking about 6% a year with an investment/GDP ratio of about 25%.. in other words.. indian economy is being more efficient, in terms of returns on the investment made.
-China needs to grow at atleast 8% yr on yr... to provide employement for the millions of youth joining the workforce every yr.
-China withstood the 1997 Asian financial crisis mainly because they lack convertible currencies. Also, Beijing controls the banks. Bailouts and the banks' near-monopoly over China's vast domestic savings have kept them solvent despite mountains of bad loans to state firms.
-In 20 years, China will have an estimated 300 million people age 60 or older. Yet only one in six Chinese workers now has a pension plan, and just 5% have guaranteed medical benefits
-Power shortage: China's own natural power resources cannot catch up with its growth. How this issue can be tackled is fundamental to its long-term growth. And with oil prices rising every other day, the current growth rate of 9% mite not be sustainable.
-The widening gap between rural and urban, west and east. China's "go west" policy is not yet reaping results, although there has been positive trends toward diverting investment in Chengdu, Chongqing, and Wuhan.
- Health issues: the danger of SARS is still looming on the horizon and chinese authorities do seem to be taking every step possible to not let that be a reason to scare away future investments. But thanks to the vast diversity and uncontrolled development in certain regions , containment in case of an outbreak will be an impossible task. in short.. this is as a disaster waiting to happen.
- Taiwan remains a thorn in the relations between Japan and china.. and though both sides seem resolved not to turn it into a reason for war. unless handled carefully and diplomatically.. it could.( read this as.. DO NOT allow the US to dictate terms in this issue!!)
- untill recently when the yuan was marginally opened up to the market forces.. things were fine.. but the very fact tat the govt is still scared to subject the yuan 100% to market forces to determine its own pricing level in the market... is an indicator of the uncertainity regarding china's stability in terms of economy and politics.. both.
inspite of all the above.. its pretty much obvious tat unless a large scale disaster strikes.. china will very much continue its stellar performance and maintain its impressive growth rate...
reason?: large land mass.. the western coast may have saturated.. but the east n central parts still remain.. n will power the growth curve in the comin 1-2 decades..
sittin here at my desk though....i cant help but wonder.. wat does all the above mean to the common man..?? china is after all just the place where the "chinees food" originated..shut up and enjoy the schezwan..!!!
what laurels are yet to be conferred on this rising dragon from the east..???
the country that from a humble begining of being percieved to be a land of oriental gang wars n tribal feuds...cheap opium and oriental pleasures..
to an economy that is closely followed and endorsed by the whole world. But all is not picture perfect in this eastern chop-suey..
the facts are plain to see..
-China has been growing at roughly 9% a year with an investment/GDP ratio of around 40%. India has been clocking about 6% a year with an investment/GDP ratio of about 25%.. in other words.. indian economy is being more efficient, in terms of returns on the investment made.
-China needs to grow at atleast 8% yr on yr... to provide employement for the millions of youth joining the workforce every yr.
-China withstood the 1997 Asian financial crisis mainly because they lack convertible currencies. Also, Beijing controls the banks. Bailouts and the banks' near-monopoly over China's vast domestic savings have kept them solvent despite mountains of bad loans to state firms.
-In 20 years, China will have an estimated 300 million people age 60 or older. Yet only one in six Chinese workers now has a pension plan, and just 5% have guaranteed medical benefits
-Power shortage: China's own natural power resources cannot catch up with its growth. How this issue can be tackled is fundamental to its long-term growth. And with oil prices rising every other day, the current growth rate of 9% mite not be sustainable.
-The widening gap between rural and urban, west and east. China's "go west" policy is not yet reaping results, although there has been positive trends toward diverting investment in Chengdu, Chongqing, and Wuhan.
- Health issues: the danger of SARS is still looming on the horizon and chinese authorities do seem to be taking every step possible to not let that be a reason to scare away future investments. But thanks to the vast diversity and uncontrolled development in certain regions , containment in case of an outbreak will be an impossible task. in short.. this is as a disaster waiting to happen.
- Taiwan remains a thorn in the relations between Japan and china.. and though both sides seem resolved not to turn it into a reason for war. unless handled carefully and diplomatically.. it could.( read this as.. DO NOT allow the US to dictate terms in this issue!!)
- untill recently when the yuan was marginally opened up to the market forces.. things were fine.. but the very fact tat the govt is still scared to subject the yuan 100% to market forces to determine its own pricing level in the market... is an indicator of the uncertainity regarding china's stability in terms of economy and politics.. both.
inspite of all the above.. its pretty much obvious tat unless a large scale disaster strikes.. china will very much continue its stellar performance and maintain its impressive growth rate...
reason?: large land mass.. the western coast may have saturated.. but the east n central parts still remain.. n will power the growth curve in the comin 1-2 decades..
sittin here at my desk though....i cant help but wonder.. wat does all the above mean to the common man..?? china is after all just the place where the "chinees food" originated..shut up and enjoy the schezwan..!!!
posted by rahul nair | 1:52 AM
2 Your take:
Comparison between india and china was not my purpose.. totally different scenarios exist..
but yes.. china's family planning policy will worsen their demographic woes in the near future... esp since like ive already stated.. insurance and medical convers are still more or less non existent in china.
hey one more pt...wht it means to the common man...a lot....indian market is almost a dumping ground for chinese goods.....ganpati murtis,cheap radios,cheap players....this means tht zero value creation in a country like India....we r jus growing as a market...but not as a producer!which in turn means common man in India is always goin to be ' two steps behind' chinese common man!
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