Reforms or face a crisis, China told

[retaxis]

The Communist Party of China who is a socialist capitalist state for the people understands two things above all..1. Never play the same game (standards) as the people who created them (see Japan in 19th early 20th century as example) and never let someone tell you what is good for your own country. No matter what standards, protocal and understanding another country would like to show you, understand the interest with of your country first from a realistic scientific betterment of the future point of view. That is the true successor of any country to learn from history..If we ever learn from history.

To further expand my first point. Japanese were horrible to the Chinese (much due to European influence) but the fact is they learnt tried to be the best at the 'worlds game' And they were. How did the Western nations treat the Japanese...? Well when they showed that they were the best at hard working, creating capital and investing...The Western nations decided suddenly to change the standards and as so..the entire game. China have also learned sensibly to the past as to the future and Chinese people know what is best for them.

 

[Götterdämmerung]

The social market economy that was the social contract of post-WWII of Germany has been eroded in the last 20 years by neocons. Even in Germany, the poor-rich gap is widening, although the profits of the large conglomerates have been flying from one record to another record. More and more people who have not been made numb with fast food and proletarian TV and soap operas are starting to resist the trend and organise themselves. The current rescue of the Euro is just a smokescreen to prolong the situation and it's long from being over. Once this ponzi scheme implodes, there will be upheavels thoughout the EU. Greece and Spain will be like foreplays.

One think that China should never do is to waste money by subsidising dying industries like we did for over 20 years with the coal and steel industry. Instead of specialising in high-tech products, training the workers for future challenges, we wasted billions to support each and every worker just to keep that industry alive. By the end of the day, our coal and steel industry was just not competitive - even though the productivity was amongst the highest in the world - the workers lost their jobs and were not qualified for new industries.

 

[retaxis]

The social market economy that was the social contract of post-WWII of Germany has been eroded in the last 20 years by neocons. Even in Germany, the poor-rich gap is widening, although the profits of the large conglomerates have been flying from one record to another record. More and more people who have not been made numb with fast food and proletarian TV and soap operas are starting to resist the trend and organise themselves. The current rescue of the Euro is just a smokescreen to prolong the situation and it's long from being over. Once this ponzi scheme implodes, there will be upheavels thoughout the EU. Greece and Spain will be like foreplays.

One think that China should never do is to waste money by subsidising dying industries like we did for over 20 years with the coal and steel industry. Instead of specialising in high-tech products, training the workers for future challenges, we wasted billions to support each and every worker just to keep that industry alive. By the end of the day, our coal and steel industry was just not competitive - even though the productivity was amongst the highest in the world - the workers lost their jobs and were not qualified for new industries.

Australian Finance minister Penny Wong agrees and explicitly stated that Australia (and any other country) must adapt and learn Skills to maintain jobs and industry. Workers can not be one dimensional and think that jobs and industry will be there forever.

 

[AerospaceEngineer]

Green depends on technology. Zimbabwe is the greenest of all. World Bank is trying to fool China into opening markets. Instead we should be closing our markets, increasing subsidies, and increasing intervention. That is the way forward.

I aggree with you.

Our Chinese companies and market should be 50% free market and 50% state owned, this way. Jobs are kept in China while competivitness are increased as well.

This is the future of our growth.

 

[fly2012]

Hasn't Premier Zhu Rongji already bought the complete free market economy intoxication from gangs of University of Chicago? Overnight hundreds of thousands of skilled heavy industry workers from Northeast lost job and everything. The state owned industrials were sold in peanut price to foreign investors. The move made China Northeast, China's strongest industrial base into one of the poorest regions in China, at the time when it had the most college graduates per capita over entire China (less a few cities like Beijing). And now China has to hire German workers to operate machines because we lost an entire generation of skilled workers. And China still have troubles making advanced engines after manufacturing and selling socks for so many years. Oh and what about those Asian tiger cubs? And Chile? They must've been very advanced countries now based on the free market theory.

State owned enterprise should exist on key sectors that defines a country. Someone already mentioned the so fractured car industry (China has more automobile manufactures than the rest of the world combined). Railway, Mining, heavy industry, cutting edge technologies should be either state owned or directed by state. They need to be reformed overtime to increase efficiency and transparency. US on one hand bail out Detroit but on the other hand IMF tells China to go "free", what a joke.

It is a bit harsh to say whoever advocates this in China should be trialed for treason, I would send them to mental hospital instead.

 

[Sonyuke_Songpaisan]

I dont trust any CCP member. Not only wen, hu and xi.

 

[marshall]

Hasn't Premier Zhu Rongji already bought the complete free market economy intoxication from gangs of University of Chicago? Overnight hundreds of thousands of skilled heavy industry workers from Northeast lost job and everything. The state owned industrials were sold in peanut price to foreign investors. The move made China Northeast, China's strongest industrial base into one of the poorest regions in China, at the time when it had the most college graduates per capita over entire China (less a few cities like Beijing). And now China has to hire German workers to operate machines because we lost an entire generation of skilled workers. And China still have troubles making advanced engines after manufacturing and selling socks for so many years. Oh and what about those Asian tiger cubs? And Chile? They must've been very advanced countries now based on the free market theory.

State owned enterprise should exist on key sectors that defines a country. Someone already mentioned the so fractured car industry (China has more automobile manufactures than the rest of the world combined). Railway, Mining, heavy industry, cutting edge technologies should be either state owned or directed by state. They need to be reformed overtime to increase efficiency and transparency. US on one hand bail out Detroit but on the other hand IMF tells China to go "free", what a joke.

If you are applying this message to the situation of today year 2012, then I totally agree. However, at the time of Zhu Rongji, China's banking system was on the verge of collapse on a scale 1-degree better than the 2008 US Banking crisis. There was no choice, the SOE drain on the treasury was too great and needed to be eliminated before the WTO agreement was fully implemented. This was in the backdrop of the 1997 Asian Financial Crisis where China held its exchange rate at uncompetitive high levels to maintain strong intra-regional trade flows. If it was not for Zhu Rongji, first China would not have entered the WTO for years and industrial and banking reforms would have either been shelved, delayed or stretched out over 5-10 years. China's entry into the WTO is an unmitigated success. It was predicted to cause millions of unemployed with vast swaths of China's industry sold into foreign ownership. Some of that has happened....but on the flip side, the resulting employment created, and sheer scale of new modern industry fostered overwhelms those negatives. Since China continued to protect its key state industries, this has allowed it to compete against the largest multinationals and allowed their competitiveness to grow to the point where they have a fighting chance to survive international competition. I hope that Wen doesn't listen to self-interested foreigners and allow large scale privatization when only some industries are internationally competitive at this point.

The northeast was subsidized at the expense and development of less developed regions of China. The northeast of today is poorer relative to its past position but in real terms it is vastly richer, more educated, and prosperous than it has ever been. Let's not pretend just because the northeast no longer holds the favored position it used to as Beijing, Tianjin and Shanghai still do. Minus any subsidies, the northeast environment of today is no different than Fujian, Henan and Hubei and substantially inferior to Shandong, Jiangsu, Zhejiang and Guangdong.

Concerning your examples of hired German workers, I don't know the background of this story but I do know German industrial prowess is unmatched the world over and are probably simply taking on Chinese apprentices just as they do in Germany. That is a good way to learn especially for China who are still way behind relative to Germany. Relating this to why China has not produced American tech level engines, I don't think you fully appreciate how difficult this task is. Modern engines have thousands of parts, most of which require tolerances that need custom materials solutions. This is the main reason why Russia (materials) is still able to produce superior engines in comparison to China even though China provides superior funding and whose aeronautics engineering has arguably exceeded Russia's. The point is, China has mastered many fields, but it is still backward in many fields. Until it is reasonably independent in every field, it cannot shut itself off the way you and others are proposing. Once China has fully caught up technologically, there is no stopping it because it will not only be immune to technology sanctions, it will become a viable alternative against Western (aka. Anglo-Saxon) alliance countries. Only then will China have the strength and immunity it has always sought from foreign aggression.

 

[fly2012]

If you are applying this message to the situation of today year 2012, then I totally agree. However, at the time of Zhu Rongji, China's banking system was on the verge of collapse on a scale 1-degree better than the 2008 US Banking crisis. There was no choice, the SOE drain on the treasury was too great and needed to be eliminated before the WTO agreement was fully implemented. This was in the backdrop of the 1997 Asian Financial Crisis where China held its exchange rate at uncompetitive high levels to maintain strong intra-regional trade flows. If it was not for Zhu Rongji, first China would not have entered the WTO for years and industrial and banking reforms would have either been shelved, delayed or stretched out over 5-10 years. China's entry into the WTO is an unmitigated success. It was predicted to cause millions of unemployed with vast swaths of China's industry sold into foreign ownership. Some of that has happened....but on the flip side, the resulting employment created, and sheer scale of new modern industry fostered overwhelms those negatives. Since China continued to protect its key state industries, this has allowed it to compete against the largest multinationals and allowed their competitiveness to grow to the point where they have a fighting chance to survive international competition. I hope that Wen doesn't listen to self-interested foreigners and allow large scale privatization when only some industries are internationally competitive at this point.

The northeast was subsidized at the expense and development of less developed regions of China. The northeast of today is poorer relative to its past position but in real terms it is vastly richer, more educated, and prosperous than it has ever been. Let's not pretend just because the northeast no longer holds the favored position it used to as Beijing, Tianjin and Shanghai still do. Minus any subsidies, the northeast environment is no different than Fujian, Henan and Hubei and substantially inferior to Shandong, Jiangsu, Zhejiang and Guangdong.

That's a reasonable analysis. I agree that SOE needs to be reformed, but selling all billions worth of equipment in only a few million dollar to foreign investors (and corrupted officials) are not the right solution. China was lucky that NE didn't explode. (Crimes and violence were wide spread) And even till this day I am not sure entering WTO at that time is a good thing or not. The "market for technology" goal was not realized by my opinion and China is still stuck on low added-value products (It may take time, let's see).

Anyway, I think we both agree that a state should protect its infant sectors.

 

[marshall]

That's a reasonable analysis. I agree that SOE needs to be reformed, but selling all billions worth of equipment in only a few million dollar to foreign investors (and corrupted officials) are not the right solution. China was lucky that NE didn't explode. (Crimes and violence were wide spread) And even till this day I am not sure entering WTO at that time is a good thing or not. The "market for technology" goal was not realized by my opinion and China is still stuck on low added-value products (It may take time, let's see).

Anyway, I think we both agree that a state should protect its infant sectors.

On a side note, here are some links to a recent recalculation of China's PPP GDP calculation. Personally, I don't put so much weight into PPP calculations since they are not so reflective of a countries international financial/economic power. However, PPP is definitely reflective of standard of living in a country.

The author, Arvind Subrahmanian stated that in 2010, China had a PPP per capita of $11047 USD$. Since then, this figure has been updated by 20-23% upwards due to errors correcting on the upside, errors made in the PENN World Tables PPP calculations with base year 2005 resulting in PPP per capita of over ~$14400+ USD$ as of 2011. The main reason for the updates are because the IMF used urban prices for China in 2005 when calculating PPP for China but used both urban and rural prices for most other countries. This caused a PPP discrepancy due to the much lower cost of living in rural areas of China which are not accounted for in the IMF PPP GDP calculation for China. The official IMF numbers are supposed to be eventually updated to reflect these facts. Bottom line is, Subrahmanian correctly points out many inconsistencies the IMF has used to calculate PPP GDP using different criteria for different countries instead of a standard set of measurements as is the rule with nominal GDP calculations.

RealTime Economic Issues Watch | Is China Already Number One? New GDP Estimates
RealTime Economic Issues Watch | GDP Estimates: An Update and a Question for the IMF
RealTime Economic Issues Watch | Oops, I Underestimated China

 

[FairAndUnbiased]

If you are applying this message to the situation of today year 2012, then I totally agree. However, at the time of Zhu Rongji, China's banking system was on the verge of collapse on a scale 1-degree better than the 2008 US Banking crisis. There was no choice, the SOE drain on the treasury was too great and needed to be eliminated before the WTO agreement was fully implemented. This was in the backdrop of the 1997 Asian Financial Crisis where China held its exchange rate at uncompetitive high levels to maintain strong intra-regional trade flows. If it was not for Zhu Rongji, first China would not have entered the WTO for years and industrial and banking reforms would have either been shelved, delayed or stretched out over 5-10 years. China's entry into the WTO is an unmitigated success. It was predicted to cause millions of unemployed with vast swaths of China's industry sold into foreign ownership. Some of that has happened....but on the flip side, the resulting employment created, and sheer scale of new modern industry fostered overwhelms those negatives. Since China continued to protect its key state industries, this has allowed it to compete against the largest multinationals and allowed their competitiveness to grow to the point where they have a fighting chance to survive international competition. I hope that Wen doesn't listen to self-interested foreigners and allow large scale privatization when only some industries are internationally competitive at this point.

The northeast was subsidized at the expense and development of less developed regions of China. The northeast of today is poorer relative to its past position but in real terms it is vastly richer, more educated, and prosperous than it has ever been. Let's not pretend just because the northeast no longer holds the favored position it used to as Beijing, Tianjin and Shanghai still do. Minus any subsidies, the northeast environment of today is no different than Fujian, Henan and Hubei and substantially inferior to Shandong, Jiangsu, Zhejiang and Guangdong.

Concerning your examples of hired German workers, I don't know the background of this story but I do know German industrial prowess is unmatched the world over and are probably simply taking on Chinese apprentices just as they do in Germany. That is a good way to learn especially for China who are still way behind relative to Germany. Relating this to why China has not produced American tech level engines, I don't think you fully appreciate how difficult this task is. Modern engines have thousands of parts, most of which require tolerances that need custom materials solutions. This is the main reason why Russia (materials) is still able to produce superior engines in comparison to China even though China provides superior funding and whose aeronautics engineering has arguably exceeded Russia's. The point is, China has mastered many fields, but it is still backward in many fields. Until it is reasonably independent in every field, it cannot shut itself off the way you and others are proposing. Once China has fully caught up technologically, there is no stopping it because it will not only be immune to technology sanctions, it will become a viable alternative against Western (aka. Anglo-Saxon) alliance countries. Only then will China have the strength and immunity it has always sought from foreign aggression.

Structural materials depend mostly on blind luck and experience, to be honest. No one can tell you why a certain alloy is stronger than something 1% less or more pure.

My specialty is in condensed matter physics and materials science. To this day, no one can come up with a method for reliably predicting the mechanical strength of a material from 1st principles. This is vast contrast to molecular binding, electronic and optical properties which can be predicted (though with difficulty). There is not even a microscopic model for mechanical strength differentials between materials the way there is for electricity (band theory), magnetism (spin domains) and optics (complicated; surface plasmon resonance governs reflection and phonon band theory governs transmission).

 

[marshall]

Structural materials depend mostly on blind luck and experience, to be honest. No one can tell you why a certain alloy is stronger than something 1% less or more pure.

My specialty is in condensed matter physics and materials science. To this day, no one can come up with a method for reliably predicting the mechanical strength of a material from 1st principles. This is vast contrast to molecular binding, electronic and optical properties which can be predicted (though with difficulty). There is not even a microscopic model for mechanical strength differentials between materials the way there is for electricity (band theory), magnetism (spin domains) and optics (complicated; surface plasmon resonance governs reflection and phonon band theory governs transmission).

Interesting you say that because last I checked, China is #1 in the world in materials science, chemistry and physics. You would think that with this base, it would at least be able to solve the engine issues more quickly. Alot has been said about Soviet/Russian expertise in metallurgy but you make the actually research sound alot more like blind alchemy which is what the real world results bear out. LOL

 

[marshall]

Economists are trying very hard to fit mathematical models based on nature, on things that are heavily manipulated. it is a fact that the world commodities markets are essentially rigged casinos and so is the stock market. that's why i think some of the quantitative finance stuff they're doing is just total bullsht. The thermodynamic models that account for human behavior are better but they still don't realize that every market is manipulated and rigged.

Economics is a social science yet the Nobel Prize for economics is always based on mathematical modeling of what essentially boils down to Human behavior on national and global scale. Unfortunately, this is largely unavoidable because the reasons why current prevailing economic theory is so entrenched is similar to the same behavioral traits that guide democracy advocates, who unquestioningly follow their ideology while ignoring contradictory facts.

True, tobacco is indeed a major threat, but it is very hard to get the older generation to voluntarily quit. Smoking, like drinking, has a social role in Chinese culture.

Smoking has only become widespread since the 1980s and can become just as unappealing as it has in the developed countries just as quickly. Once the first leukemia/lung cancer wave begins, mark my words, there will be a nationwide campaign similar to what has already happened elsewhere.

 

[marshall]

To further expand my first point. Japanese were horrible to the Chinese (much due to European influence) but the fact is they learnt tried to be the best at the 'worlds game' And they were. How did the Western nations treat the Japanese...

Japanese were cruel to the Chinese and others not because of any European influence you're referring to. The Japanese culture is mostly to blame for this. Japanese martial cruelty stretches back centuries and arguably worse than the Spanish Conquistadors.

 

[FairAndUnbiased]

Interesting you say that because last I checked, China is #1 in the world in materials science, chemistry and physics. You would think that with this base, it would at least be able to solve the engine issues more quickly. Alot has been said about Soviet/Russian expertise in metallurgy but you make the actually research sound alot more like blind alchemy which is what the real world results bear out. LOL

Its true. Take steel. Adding carbon makes steel stronger than pure iron, right? It is explained in chemistry textbooks as being due to interstitial carbons preventing plane slip.

adding about 0.4% carbon to iron turns it into high strength steel. However, the more you add after that, and especially beyond 2%, it makes the steel SOFTER and WEAKER. In fact, above 2%, "carbon steel" becomes cast iron: soft and castable. Gray cast iron has LOWER tensile and shear strength than steel despite having over 5 times the carbon content, but steel itself is stronger than pure iron!

Metallurgy, IMO, is mostly experience. My expertise is mostly in polymers, and polymers due to being artificial can be "designed" the way natural materials like metals cannot be. The same is true of semiconductors and functional ceramics like piezos and superconductors which are essentially artificial materials and never occur in the real world. Metallurgy, machinery and things like that are just as much experience as they are theory. You know cars? Designing a good car takes experience. Seasoned engineers sometimes can just point to a diagram of a car and say "that's where the seat should go for maximum comfort", etc etc.

 

[iajj]

if zoellick had printed out his speech, it just made the paper it was printed on worth less toilet paper. that is how much american advice must be valued: negative. i don't try one syllable of american words