xtronics

The Great Bubble of China: Next to Pop?

Not sure how to take this - the problems with corruption are true - but corruption is also rapidly infecting the USA where people are giving up fighting the government. The fundamental fact of China's balance of trade means that China is getting much richer - that isn't the same as Chinese people moving up, but up is up.

The tie with Taiwan is the big issue. It won't be a one sided deal - yet both parties have so much to gain that the move almost has to happen. Taiwan has management skills and expertise and China has cheaper labor - and lots of it.

Taiwan will bring more to the table - it will be a force to open up China to political reforms, if - and don't forget this if - if China moves to a point where there is a workable system to address the corruption, then the sky is the limit.

The social part of business is alive in all cultures - I understand the gifts and forming a click breeds corruption, but it also breeds cooperation. The problem is that the markets need to be opened - China has to realize that they are becoming more capitalistic than the USA and it is moving them up (while the USA rapid move to socialism is bringing us down).

If China tied their money to gold and opened it for trade and opened their stock markets to the world (no more separate A vs B stocks) the possibilities are endless.

So the real question is how much of an anchor is corruption on the actually capitalistic culture of China? Will it only slow China or will it keep China pinned down just as corruption keeps the Philippines from moving up?

Transparency International ( www.transparency.org/ ) rates China much above the Philippines and the Chinese seem to run most of the businesses in the Philippines in spite of the corruption.

I hope that the leaders in mainland China might read
'The New Institutional Economics of Corruption'
By Johann Lambsdorff
and realize the great economic cost of corruption and find ways to fight it. Will it happen overnight? No - but as China gets wealthier it is easier to fight corruption.