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This time is different, says Stephen Roach, arguing why the China "development miracle" will...

This time is different, says Stephen Roach, arguing why the China "development miracle" will continue. The crux of his case seems to be that smart central planning really can abolish the business cycle and direct a massive nation and impossibly complex economy exactly where it wishes it to go.
Comments (23)
  • PVizzle
    , contributor
    Comments (741) | Send Message
     
    I doubt we'll have to wait long to see Mr. Roach proven wrong.
    27 May 2011, 02:39 PM Reply Like
  • The Enterprising Value Inve...
    , contributor
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    I can't say when, but I can bet that this time won't be any different.
    27 May 2011, 02:40 PM Reply Like
  • WMARKW
    , contributor
    Comments (10295) | Send Message
     
    I can't tell you what it is, but there is some Einstein like unified theory of economic behavior that is a fundamental equation. The reality is you can push on one side like a balloon and maybe you will get some action in one direction or another for a while. But sooner or later the "equal and opposite" reactions will take place ( I know that's not Einstein's) and come compensating set of events will introduce themselves to "revert" to the fundamental equation.

     

    So....there is no difference this time.
    27 May 2011, 06:40 PM Reply Like
  • The Enterprising Value Inve...
    , contributor
    Comments (520) | Send Message
     
    Well I think one of those fundamental equations is that economic growth (and I mean legitimate market driven economic growth) is real hard to come by. You need increasing capital per labor hour, you need real productivity improvements and history has show that those stats only grow modestly sans an industrial revolution type event.

     

    While I am not saying that China is going to have a hard landing that will make all previous hard landings look like child's play (lets recall that unlike the US or Japanese RE booms, they don't have mounds of debt to make the downside very ugly), I am saying that at some point, the Chinese people will need to make some difficult economic decisions if they wish to be a first world economy.
    28 May 2011, 09:10 AM Reply Like
  • Glocks-n-Gold
    , contributor
    Comments (189) | Send Message
     
    Doesn't "smart central planning" qualify as an oxymoron?
    27 May 2011, 02:46 PM Reply Like
  • twcinnh
    , contributor
    Comments (4) | Send Message
     
    eg. "Federal Reserve Bank" and "Too Big To Fail".
    29 May 2011, 06:17 AM Reply Like
  • Leftfield
    , contributor
    Comments (3794) | Send Message
     
    China started out with a hard-working population willing to work for $30/month 15 years ago, $120 or so now, so imagine what a reasonably honest free-market regime could accomplish in China.

     

    State-directed economic coercion and theft has extinguished growth in most of the West and is likely to flatten far more honest opportunity in China then would a more benign regime.
    27 May 2011, 02:51 PM Reply Like
  • Christopher Grey
    , contributor
    Comments (117) | Send Message
     
    Somebody wake Lenin, Stalin, Mao and others from the dead and give them a parade now that we know central planning really does work. You just need to be really smart. What a bunch of nonsense. China is an investment bubble in the same way so many other markets have been before them for hundreds and even thousands of years. China has 1 billion people who live at a subsistence level as peasant farmers. The other 300 million are starting to do well and about 1 million people are doing really well, but there aren't enough resources to go around. Ultimately, China will collapse under the weight of shortages, inflation, and civil unrest. There is no way, no matter how much they depress their currency, that they can employ and feed enough of their people in the long run to prevent this. Think of what would happen here if 75% of our population made less than $5,000 per year, or 10% of the national average. That's the equivalent of what they have in China. The only long term solution is to break up the country so that the successful areas with wealthier people don't even use the same currency as the impoverished areas. That way the impoverished areas will remain competitive for labor and the wealthier areas can focus on consumption and services rather than speculating in asset markets. There is no way this will happen with the Communists in charge though. They will never give up any power. So the game of central planning deception continues until it collapses.
    27 May 2011, 02:52 PM Reply Like
  • Angel Martin
    , contributor
    Comments (1305) | Send Message
     
    the same academics made the same arguments about the USSR when it was "growing" faster than the US in the 1950's and 1960's.

     

    Central planning + political corruption + fraud + rigged markets = the potential for the world's biggest crash - to date.

     

    "this time it's different"... check back 2 yrs after chinese real estate prices peak: that's the typical time lag between the real estate peak and the stock market crash.
    27 May 2011, 02:55 PM Reply Like
  • Credible Clarity
    , contributor
    Comments (160) | Send Message
     
    How about Central Banking (Fed) + political corruption + fraud + rigged markets = Investment/Business climate in USA today.
    27 May 2011, 03:12 PM Reply Like
  • Christopher Grey
    , contributor
    Comments (117) | Send Message
     
    Exactly. All the "best minds" thought the USSR would crush the US. They were all dead wrong for reasons that were obvious to anyone with common sense.
    27 May 2011, 04:27 PM Reply Like
  • DrBenway
    , contributor
    Comments (300) | Send Message
     
    Here's by far the funniest part:

     

    In 2009, about 280,000 domestic patent applications were filed in China, placing it third globally, behind Japan and the United States.

     

    What is he smoking? What patents? Did he take this line from Chinese Communist manifesto?

     

    China has ZERO respect for intellectual property. Just go to one of Beijing "copy-market" where they openly sell crappy knock-offs of Western brand.

     

    It remains to be seen if China can rise above low-end manufacturing. They only succeeded in copying, but not innovation.

     

    To say China is innovative is ludicrous. US got Apple and Google, Japan got Toyota and Mitsubishi, Korea has Samsung and LG. What does China have? Huawei (cheap crappy appliances) and Lenovo (IBM PC rejects)?

     

    I don't think Roach has ever been to China, or at least never stepped out outside his luxury hotel.
    27 May 2011, 03:02 PM Reply Like
  • cash
    , contributor
    Comments (447) | Send Message
     
    Even while their 'innovations' are not completely new, the Chinese market power & growth leaves our companies with few options but to sell out - so they can at least make a few bucks. Something like beggars can't be choosers. With the advanced economies shrinking or growing slowly, the buyers in emerging economies hold more cards than ever. China has been able to dictate terms to several of our companies, take the innovations, modify & compete against the same companies at a cheaper rate. Will continue for a while, until the labor costs in China raise substantially, and globalization forces an equilibration of wealth across developed & developing nations.
    27 May 2011, 03:31 PM Reply Like
  • Joe Morgan
    , contributor
    Comments (1500) | Send Message
     
    People who bet against the US get their head handed....

     

    China is nothing compared to the US....

     

    China is looking better than the US, because China is starting from a lower base, let's see what happens ten years from now....
    27 May 2011, 03:08 PM Reply Like
  • Mad_Max_A_Million
    , contributor
    Comments (1175) | Send Message
     
    In a country like communist Red China they can force you to pay into a socialist retirement plan, and then rob the account of trillions to pay for their next ponzi scheme. And then you're screwed...

     

    Oh Wait, In sorry! That's a U.S. Government scam. My Bad!
    27 May 2011, 03:21 PM Reply Like
  • Joe Morgan
    , contributor
    Comments (1500) | Send Message
     
    Nope, paying into Social Security is NOT an obligation...
    Nice try....

     

    Tell that lie to the half witted people.....
    27 May 2011, 06:25 PM Reply Like
  • WMARKW
    , contributor
    Comments (10295) | Send Message
     
    China is following the same model as Japan did 30 years ago.

     

    They don't have the cultural and historical history of innovation that the US has. That doesn't develop over night.

     

    If you follow the S curve in Japan they have been struggling for some time now. I agree that China will grow, but just like Japan...they will begin to meet resistance points.

     

    Both China and Japan have been helped by weak currencies vis-a-vis USD. At some point those advantages change.
    27 May 2011, 06:46 PM Reply Like
  • cbc
    , contributor
    Comments (411) | Send Message
     
    No, copying works for most of the population of the emerging markets. A cheap product that does a half assed job is exactly what the emerging markets are willing to buy. The Chinese will crush us as long as we continue to make products that are not much better. We need to provide products that are far and above the competition at a competitive price. Take a trip and base your opinions on what the rest of the world is thinking and buying. My guess is you live in a cacoon.
    27 May 2011, 07:24 PM Reply Like
  • Mad_Max_A_Million
    , contributor
    Comments (1175) | Send Message
     
    Took this straight off the gov site:

     

    Quote - Participation in the Social Security program is mandatory with respect to the payment of Social Security taxes. Unless specifically exempt by law, everyone working in the United States is required to pay Social Security taxes on earnings from employment. These earnings are subject to Social Security tax without regard to the citizenship or place of residence of either the employer or the employee. Un-quote...
    What do you normally smoke, Joe?
    28 May 2011, 10:51 AM Reply Like
  • Joe Morgan
    , contributor
    Comments (1500) | Send Message
     
    Is not an obligation to everyone, I stand correct, notwithstanding your full explanation.....

     

    A lot of people are exempted......
    29 May 2011, 09:49 AM Reply Like
  • Joe Morgan
    , contributor
    Comments (1500) | Send Message
     
    My apologies for not explaining better my point of view, I should have said that it was not an obligation to all....
    29 May 2011, 10:11 AM Reply Like
  • Glocks-n-Gold
    , contributor
    Comments (189) | Send Message
     
    In Roach's defense, he is connected with one of the "Ivy League" schools which means there's just no way for him to know better. Or really know anything for that matter.
    27 May 2011, 04:45 PM Reply Like
  • Mad_Max_A_Million
    , contributor
    Comments (1175) | Send Message
     
    Apology somewhat accepted, Joe Crash. Calling my statement a lie was a little over the top, even for you. KEEP it CLEAN...
    29 May 2011, 11:38 AM Reply Like
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