Road Runner

China Becoming a 'Middle-Class' Nation

One thing is for sure, at least in my mind, is that China has a fighting chance to make a significant reduction in their poverty numbers. But, hapless, deeply corrupt, highly bureaucratic India has little chance.

India is always going to be a sewer of an economy, just like its rivers. I don't see any effort in India that comes close to the effort in China to aggressively improve the economy and pull up the standard of living of the common person.

This is why I like China for investment much more than India.



On Sep 09 10:24 PM Pete Stenwick wrote:

> CHINA
> 836 million in China live on $2.00 or less per day:
> - 162 million live on between $1.26 - $2.00 per day.
> - 544 million live on between $1.00 and $1.25 per day
> - 130 million people living in China survive on less than below $
> 1 a day
>
> INDIA
> 903 million or 79.9% of their population live on less than $2 a day.

China Becoming a 'Middle-Class' Nation

Very true. Eventually the centrally planned economy of China will run into problems. But, that will not be for many decades. As long as China has many opportunities to apply modern technologies, especially in infrastructure, they will continue to grow at a very fast pace. The productivity gains from applying modern technologies far outweighs the natural inefficiency and corruption of a strong central government.


On Sep 09 11:14 AM Alphameister wrote:
> Centrally planned economies "always" fail, most importantly because
> they fail to get the prices right. China has had the good sense to
> use international markets to set prices generally (though meddling
> in certain areas just like the more developed "capitalist" countries
> do). There will inevitably be inefficiencies associated with their
> central planning, but they are growing from such a low base with
> so much known technology still underutilized in their country, and
> they are so soundly based financially, I see no reason that their
> centrally planned "capitalist" economy cannot generate superior economic
> growth for many years to come.

Can China Convert Itself into a Consumer-Based Economy?

To understand how to stimulate consumer spending in China, a person must understand “Maslow's hierarchy of needs”. en.wikipedia.org/wiki/... . This concept is taught to college freshman in the “Intro to Psychology” class.

The basic idea of Maslow's hierarchy-of-needs is that lower levels of human need must be met in order for humans to pursue higher levels of need. The lowest level is “Physiological needs” such as food, water, shelter, sleep, etc. The next lowest level is “Safety” like personal safety, financial safety, health and well-being, a safety net against accidents/illness and the adverse impacts, etc. The level above these 2 is “Social needs” like frienship, family, etc. The level above these 3 is “Esteem”.

Consumer spending, beyond basic needs, happens mainly for people that are in the “Social needs” and “Esteem” level. People must have the more basic needs “physical” and “safety” met before they will pursue social needs and esteem.

So, if the Chinese government wants to encourage consumer spending, it should not focus directly on it via some advertising campaign, etc. It should focus instead on the lower levels of physical and safety needs. If you make people feel like they never have to worry about getting enough to eat, a place to live, health care, etc., then they will start thinking about the better things of life.

Krugman to China: Go Green or Pay the Price

Like usual, people are stuck in one extreme or the other on this debate, when the solution is in the middle. The new green economy does not have to be a burden on the US economy if it is implemented with the right incentives and at the right pace.

Eventually, it will be the best thing economically to use solar power instead of coal and oil. The technology and manufacturing is advancing very quickly. The key is to create incentives to "get over the hump" of near term higher expense without heavily burdening the economy so that manufacturing scale will bring down prices and make alternate energy more cost effective that coal and oil. It’s a matter of hitting the “sweet spot” best balance between higher short term energy costs and long term alternate energy development.

Let the Chinese stay in the past depending heavily on coal and oil.

China Looks to Electrify Our Cars

BYD itself admits that the US will be the last market it attempts to enter. Europe will be before the US because fuel prices are higher there. China will be the first market, and China has huge demand so it will keep BYD very busy as it ramps up capacity.

Also, BYD has a lot of work to do to improve safety, reliability, interior ergonomics (make it nice for first world customers), etc. So, I don't see BYD to be competing effectively in the US for a minimum of 5 years, though you may see some very low volume sales.