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TMFMmbop (37.84)

Why China Will Succeed...Or Fail

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June 05, 2009 – Comments (9)

Two slides for you today. First, why China will succeed...

Second, why China will fail...



Of course, if you believe yesterday's June 4 editorial in China's Global Times newspaper, then I've set this up all wrong because totalitarianism is a reason China's economic development has suceeded so wildly up this point.

Let me know your thoughts in the comments below.

9 Comments – Post Your Own

#1) On June 05, 2009 at 3:21 PM, starbucks4ever (98.67) wrote:

Bought 2 trillion dollars of toxic treasuries. Will realize that it does not have the 2 trillion dollars that it thought it had, and will plunge into a depression, barely growing at all and consuming very little commodities, and unable to increase domestic consumption.

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#2) On June 05, 2009 at 3:29 PM, chk999 (99.97) wrote:

China will ultimately succeed because they have discovered that capitaliism + education = rocket fuel

The make or break moment will be when the emerging middle class decides it wants come political power. If it happens in an orderly way, then China will be the dominant power of the 21st century. If it doesn't, then look for a world war about 2025 as the gerontocracy uses an external threat to keep peace at home and to find a use for the millions of excess males they have.

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#3) On June 05, 2009 at 4:37 PM, jstegma (29.43) wrote:

China will just be China.  Calling it a sucess or failure is a question that requires a specific goal and a specific time frame.

China has been China for thousands of years.  If the day the first emperor came into power, you'd asked the question "Will China succeed or fail?", what would your answer be today to that question?  What if you had to answer 30 or 40 years ago when China was in tougher economic times?  It's the same answer - succeed.

The Chinese have a very strong national identity.  They don't seek to expand and build a big empire of non-Chinese.  I don't expect these things will change in the coming years.  They'll have some tough times and maybe a change in government, but they'll still just be China.

That said, I wouldn't invest there right now. 

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#4) On June 05, 2009 at 4:41 PM, ByrneShill (76.93) wrote:

You forgot the #1 headwind for China: demographic.

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#5) On June 05, 2009 at 4:47 PM, hhasia (65.63) wrote:

"Bought 2 trillion dollars of toxic treasuries. Will realize that it does not have the 2 trillion dollars that it thought it had, and will plunge into a depression, barely growing at all and consuming very little commodities, and unable to increase domestic consumption"

On the surface this seems like a true statement. What is more important is that China had the IMF back this purchase with Gold!. The hard stuff. Knowing the risk, they were ahead of the game. So the "depression for China" is moot.

Shrewd. Plain and simple, China will out pace all economies. The worriesome bit is how to feed the masses, as an exodus from the rural to urban grows. That middle class, could kill them if they do not have a very tight reign on the food production side of the equation. More mouths to feed than you could imagine. This is the driving factor for a totalitarian govt, period. Something the US has not encountered, nor has on the agenda as a priority. The dynamics are out of the wrelm of US thinking.

HH

 

 

 

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#6) On June 05, 2009 at 5:06 PM, TMFMmbop (37.84) wrote:

Yeah, I include the demographic issue as a consequence of the "One-Child Policy," which is listed under Totalitarianism on the "Why China Will Fail" slide.

The commenter noted that I should define my terms and a timeframe, so let's say...best-performing economy of the next 10 to 20 years.

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#7) On June 06, 2009 at 1:00 AM, hhasia (65.63) wrote:

"The commenter noted that I should define my terms and a timeframe, so let's say...best-performing economy of the next 10 to 20 years"

Without a doubt one of the high ones, but not the best. I look for Vietnam and Indonesia to out perform China in % terms.

This is of course without a major war. With that all bets are off. Want to know whats happening, watch Israel, and plan accordingly, and consider that eternity is far more important than economics. "Gain the world, lose the soul" POOR choice.

HH

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#8) On June 06, 2009 at 1:12 AM, starbucks4ever (98.67) wrote:

"What is more important is that China had the IMF back this purchase with Gold!"

How so? What is your source? 

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#9) On June 07, 2009 at 4:14 PM, UltraContrarian (32.08) wrote:

zloj - Any time a CAPS member mentions IMF and gold in the same sentence, there's a 99% chance they just made it up.

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