China is the fundamental crisis producer to world economic

We all learned Marxist economy theory in high school, the basic theory is that a economy crisis will present when the general public has no enough money to buy the goods produced. When the working public is exploited too heavily by capitalists, gradually the buying power of the general public is decreased compared to their output. Modern capitalism countries like USA, German have learned their lessons, worker's rights have been greatly protected since the general public hold more power of vote than capitalists (people with money).

But China is still practicing the cruelest form of early capitalism, people's income growth lagged way behind economy development speed. That is why demand from domestic market is always a big problem in China's economy. The strange thing is that China's economy just continues to develop in spite of this problem. The answer lies in globalization, the demand from foreigners absorbs Chinese people's production. Do not be too excited just now, the problem of imbalance between production and demand still exists, accumulates, it will not disappear magically on its own. What is happening now is that foreign workers are losing their jobs, they are losing their buying power to consume China's output. The longer this goes on, the more imbalance accumulates, the bigger the problem gets, the bigger the economy crisis will become. This is at least part of the reason why current US economy recovery is a jobless recovery.

Now, lets talk a little about current struggle between US and China on RMB valuation. The expression of basic economy issue on foreign exchange front is huge trade surplus accumulated in China. This of course can't go on forever. Countries like USA who endure huge trade deficit are asking China to revalue China's exchange rate so that China's products will be more expensive such that goods in USA will be more competitive. Company inside USA can't exploit its people to the extent like China does to its people, so they have no hope of lowering their labor cost to the extent to compete with Chinese products. (by the way, this is a big reason why people like me wants to immigrate to USA since we are protected much better here even as a foreigner with no political status at all). This is a very fair requirement, countries like USA will think "whatever you do inside your China border is your own business, but you can't keep on steal jobs from my country". If China just ignores the requirement, there will be a day that importing countries will just impose an arbitrary importing tax on goods from China to such extent that trade with China is balanced. Or USA economy will just crash, then the huge US dollar reserve accumulated by China will be worthless. Either way, economy laws will be respected one way or the other, China's current behavior has to be changed, to ensure the working class people being able to afford their own production, then the economy development is sustainable, the globalization is sustainable.

From the analysis above, we can see who has more power in the economy between US and China. China's current economy development depends on the import from US, while US does not need China at all in the sense of economy development. Of course, cheap Chinese goods make US people's lives easier, but this is just not sustainable.

所有跟帖： 

• 同意。美国的根本问题是保持贸易平衡，不行了必须自己 -想说我就说- ♂ (249 bytes) () 02/22/2010 postreply 18:26:55

• thank you for your feedback! I do not think US will -longtermInvestor- ♂ (278 bytes) () 02/22/2010 postreply 19:27:36

• Agree with you. It is now time to solve the dual problem -729418- ♀ (78 bytes) () 02/22/2010 postreply 21:27:09

• 回复：China is the fundamental crisis producer to world economic -zengjp- ♂ (596 bytes) () 02/22/2010 postreply 20:27:04

• thank you for your contribution to the topic -longtermInvestor- ♂ (0 bytes) () 02/23/2010 postreply 00:35:21

• I think India's exchange rate is not like China -longtermInvestor- ♂ (1024 bytes) () 02/22/2010 postreply 23:05:07

• 回复：India get high paid us jobs no matter what; -longtermInvestor- ♂ (892 bytes) () 02/23/2010 postreply 00:06:13

• My point is that any economy depending on -longtermInvestor- ♂ (712 bytes) () 02/23/2010 postreply 00:19:28

• 同意。客观上是这样。只是是有意为之，还是误打误撞的差别。 -蒙得- ♂ (0 bytes) () 02/23/2010 postreply 07:52:19

• mostly disagree -ppj- ♂ (904 bytes) () 02/23/2010 postreply 09:34:05

• In terms of China's time table -ppj- ♂ (466 bytes) () 02/23/2010 postreply 09:37:18

• lots lots of bs -curiousGeorge2- ♂ (0 bytes) () 02/23/2010 postreply 09:37:31

• one cannot use Maxism to explain the present situations -curiousGeorge2- ♂ (0 bytes) () 02/23/2010 postreply 09:39:58

• why not? give some reasoning, please -longtermInvestor- ♂ (0 bytes) () 02/23/2010 postreply 09:54:25

• if Maxism worked, Sovet Union would be no 1 today. -curiousGeorge2- ♂ (0 bytes) () 02/23/2010 postreply 11:17:49