Friday, March 11, 2005

Other Opinion on China

James Pinkerton over at Newsday gives some hope to those who are leery of China’s economic practices. Namely he argues that the country’s economic policies will eventually lead the boom to end in a possible sudden fashion.

“So is the economic picture here sunny? Some see stormy weather ahead. A leading American hedge-fund manager, Peter Thiel of Clarium Capital Management in San Francisco, sees China’s enormous expansion as “a bubble,” created in part by interest rates so low that they have actually turned negative. That is, because of anomalies in the relationship between the Chinese yuan and the U.S. dollar, lenders are, in effect, paying borrowers to take their money. Needless to say, such money is not always well spent. And of course, such flukish financial circumstances won’t last long....

...Financial ups and downs are part of any capitalist system. But other concerns are unique to China. For example, this is officially a communist country. For every entrepreneur making a bid for world market share, there’s also, seemingly, a state-owned enterprise making a plea for yet another bailout. Such government-run firms are inefficient and uncompetitive, but they and their employees are woven into the politics of this country.

And speaking of politics, what about freedom of the press? Of religion? These are questions that most Chinese prefer not to discuss. And for as long as they keep outproducing the world, they might not have to.”

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