is still one-third the size of the US economy.
and still hasn’t surpassed tiny Japan’s economy.
Most overrated nation ever. This talk of “emerging” economies makes me chuckle. They call India an emerging economy, where government spending forms 38% of the GDP itself, and which still has large and inefficient public sector enterprises forming a large part of its economy, even though they don’t generate any free cash flow, and run on more and more external financing. This BRICIS (Brazil, Russia, India, China, Indonesia, Singapore) talk by Goldman Sachs is just to cheer up some internationalist sentiment for the sake of appeasing some government policy makers on their way to some international meetings. This flattery is done to get these nations on their side.
So anyway, China. In China, you don’t get loans. Try very hard, banks refuse. So instead, you save most of your income, instead of being able to spend it on yourself, and increase your standard of living. To buy even a house, you save, with little possibility of being given a loan on easy terms. But even what you save, you don’t get a good interest on it. Deposits pay very little interest.
Banks pay very little interest, because as mandated by the government, they are to throw away their money to large corporations on easy terms and low interest rates. Small and medium size enterprises get nothing. Large corporations can keep getting more and more financing, which they throw away more and more gladly. Chinese manufacturing plants on top of mountains have workers who carry coal down from the uphill roads to bring the coal to the generators. A sign near the factory will tell them not to bring more than a certain amount of coal. It’s because they are bringing in too much coal, which is far more than what they need to use, even though they paid for it with their easy financing. Generating electricity and getting other conveniences is also easy, because the government subsidises it for these large corporations. So they waste that too. With huge operating costs, they just keep going for more and more financing, while retaining all they earn. They can do that, because Chinese government owns these companies, and they can allow them to not declare dividends, since the government people are on the board of directors and top management, and already get their payoffs.
I thought “economy” meant minimizing use of anything, and putting them only in their most productive possible uses. This is not economy, it is one huge diseconomy. And it’s a wastage of capital, fuel, labour, and earnings, when they could have gone for other purposes, where they would create more range of goods and services and with more people able to afford them, while more new jobs and newer range of jobs open up with more lucrative payoffs to more number of people.
Back in the days when Japanese used to run cotton mills in China, they ran it better than their Chinese competitors, and paid their Chinese workers much more. That’s because Japanese knew how to manage and economise. Chinese know only how to contact bureaucrats who can give them more and more assistance.
Many Chinese are still poor, and the Chinese know it. But to reaffirm their national glory and sense of progress, they use ostentatious nationalist display of arms and military power, by showing all the missiles and tanks they have spent money on, so that the poor of China are reminded that they still live in a glorious country.