Carlos Lam

China Becoming a 'Middle-Class' Nation

On Sep 11 02:31 AM The Truth1798 wrote:

> Hey Jeff,
>
> The whole premise of your article is wrong. China does not have a
> very high savings rate when you factor in the complete utter lack
> of a social safety net. Nearly all of China's savings is simply for
> personal retirement and healthcare.

The fact that the savings may be "earmarked" for retirement and possible healthcare spending is irrelevant. The savings get banked, and that pool of capital gets allocated to entrepreneurs. It is the ACT of saving, not the goal that one is saving for, that creates the necessary pool of capital.

China Becoming a 'Middle-Class' Nation

On Sep 11 02:31 AM The Truth1798 wrote:

> Hey Jeff,
>
> The whole premise of your article is wrong. China does not have a
> very high savings rate when you factor in the complete utter lack
> of a social safety net. Nearly all of China's savings is simply for
> personal retirement and healthcare.

The fact that the savings may be "earmarked" for retirement and possible healthcare spending is irrelevant. The savings get banked, and that pool of capital gets allocated to entrepreneurs. It is the ACT of saving, not the goal that one is saving for, that creates the necessary pool of capital.

China Becoming a 'Middle-Class' Nation

Jeff, excellent article. Again, I share your bullishness on China because of their population size, huge savings pool, and business-friendly government policies. I do have a few questions:

1. Isn't the amount of loans made by banks in China during H1 of some concern? If the government was pushing banks to lend and too many bad loans resulted, that could create at least temporary economic problems. Or do your stats indicate that Chinese banks capital cushions are sufficient enough to absorb losses?

2. In the long term (30+ years), won't the unintended consequences of the One Child Policy cause serious social problems when there are too few workers supporting too many elderly?

China Becoming a 'Middle-Class' Nation

On Sep 09 06:00 AM Ben Gee wrote:
> Before China can save the world, it must save itself first.

I challenge you to go to Beijing, Shanghai, or some of the other developed cities and see if they need to be "saved." Sure, a large part of China is still underdeveloped; Appalachia and the deep South were underdeveloped during the late 1800s to early 1900s when the American economy was providing real growth. Just because a sizable chunk of a population has not achieved a certain level of income does not mean that the nation isn't on the right trajectory.