Snow slowdown in the USA: China forges ahead

 

    The USA has just had its bad winter moment. Its first quarter 2011  GDP figures were disappointing, with the snow as the leading suspect.  Parts of the USA had a savage winter with snow disrupting activity despite better preparation and mechanisation to handle it than in the UK.    

         Inflation is also on the rise in the USA. If you print enough extra dollars, and drive the value of the currency down enough, you will discover as the UK has done that things get dearer when you import. Japan has just had another debt warning, as the amounts she needs to borrow to repair the damage of the tsunami and earthquake mounts. At least Japan so far has borrowed the money the state needs from Japanese savers, leaving her less vulnerable than European countries that have a penchant for spending foreigners’ money.

             There are plenty of critics around saying China is past her best and will encounter problems from here. The latest argument is that China now has an ageing population which will be less energetic and successful than the youngsters who have powered Chinese growth to date. I think these critics are a few years too early. They underestimate the driving force of seeking better living standards in a state without generous welfare benefits on western lines. There are still millions of people to come off the land and into better paid factory jobs, and many wage rises ahead for those already in the urban areas. The Chinese five year plan assumes a huge increase in living standards over the next plan period. It got off to a flying start with a 20% increase in the minimum wage this year. Under the last five year plan many Chinese got higher wages by making things the west wanted to buy on borrowed money. Over the next five years more and more Chinese will earn better money from making things their neighbours want to buy using hard earned money.

          The west is still busy with Midle Eastern wars and wrestling with its huge debts. Meanwhile the emerging economies are still growing very strongly and showing every intention of working their way to much greater prosperity. If the west is serious about maintaining and improving  its living standards and getting more people into jobs, it has to take this competition seriously. That requires western governments to become much more business friendly, to attract the jobs, capital and enterprise to western places, or merely to keep here what we already enjoy. It  also requires having plenty of friends around the world who want to buy our goods and services.

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13 Comments

  1. lifelogic
    Posted April 29, 2011 at 8:06 am | Permalink

    “to become much more business friendly” it could hardly be much less.

    We could easily have growth at 10% if the government just got out of the way, stopped wasting money and gave the impression they were at least going in the right direction.

    I listened yesterday to Barron Dennis Healey on the excellent Desert Island Disc BBC archive pod casts. How on earth can someone with a double first (Greats) and all those years experience of life under his belt still be such a twit. 98% tax rates and “until the pips squeak” and Thatcher was a “very very bad politician” because apparently, according to him, she had no interest in the “Arts”.

    These people seem to know all the facts yet have now understanding of people, motivations, economics or mechanisms. They cannot see the wood for the trees even with their high IQ’s and 92 years experience of life. Perhaps their main problem is they assume, wrongly, that other people are all similar to themselves in motivations interests and abilities.

    • acorn
      Posted April 29, 2011 at 10:31 am | Permalink

      Lifelogic. I don’t know which local elections you have next week but I have just read our local listing of runners and riders. I still recognise most of the names, very little young blood apparent. As usual, many of the Wards are uncontested at Parish level; (no rich menu of expenses at Parish level).

      Our Shire District is well covered and there is no County election. Shire Districts and Shire Counties are an anachronism, incongruous in this cash strapped century. But I can spot the modern multi-councillors. Those that get elected to a Parish; a District and a County(perfectly legal for some reason); which makes a very nice little earner expenses wise. Throw in a couple of local quangos; like a National Park Authority; a PCT and a Police Authority etc etc and you’re quids in.

      I am still waiting for Secretary Pickles to “unitise” the current mess in England (Scotland and Wales were unitised a while back before devolution), but I am not holding my breath. Perhaps an English parliament will get here first (LOL).

      • lifelogic
        Posted April 29, 2011 at 6:03 pm | Permalink

        I suspect all the movement will continue to be in the direction of more and more government, politicians and expense and expenses. It always is and Cameron shows no sign whatever of trying to getting a grip on the problem.

        Does he even see it as a problem?

    • Stuart Fairney
      Posted April 29, 2011 at 10:41 am | Permalink

      “We could easily have growth at 10% if the government just got out of the way”

      Yes, yes indeed. It is to the eternal shame of the western politicians that they will not even aspire to such targets and as such ensure our relative decline.

  2. Brian Tomkinson
    Posted April 29, 2011 at 8:36 am | Permalink

    Enjoy the royal wedding.

  3. zorro
    Posted April 29, 2011 at 10:53 am | Permalink

    A fair few state pounds spent on this ‘private wedding’ I’m sure…..I hope we can get the ‘Wills and Kate’ show on the road to bring in some much needed foreign lucre to cover the cost.

    However, I hope that they are happy in the future….and pay their way.

    zorro

  4. forthurst
    Posted April 29, 2011 at 4:12 pm | Permalink

    According to the IMF, China will overtake the USA by purchasing power parity in 2016. The USA has had over 100 years as top nation having taken our title with Germany concurrently.

    The factors which took away our pre-eminence are as much in play with respect to the USA: size, imperial overreach, a self-appointed hereditary elite concerned only with its own survival and continuing enrichment, relative decline in industrial power. In addition, China has a trump card, namely their group affinity and concomitant intelligence; only in the Cultural Marxist cookbook is diversity a strength or intelligence an artifice of white supremicim; but then again, Cultural Marxism with its deliverables of ‘political correctness’ and ‘hate’ laws was conceived to disarm and destroy us from within.

    Despite our declining strength, we still pretend that we are a major force on the world stage, even if we have not, for a very long time, been allowed to choose who are enemies without incurring US presidential disapproval. Our forces go into battle continuously, bafflingly, to most people, and armed with bravery and not much else, whilst the country they leave behind becomes daily, weaker, more alien and less deserving of their gallantry.

    How will the USA deal with the end of empire? Will they fail to back off like us, blinded by arrogance, causing themselves and others, millions of deaths and untold misery? Will they reap the consequences of their self-inflicted diversity and fracture? Will the end come suddenly with a precipitous loss of confidence in the antics of the private secret FED and the attached coterie of financial spivs concerned only over who has the largest compound and private yacht, with a flight from dollar denominated bonds, as the Chinese, who invented paper, finally decide that others’ may be less than authentic.

  5. Badger bill
    Posted April 29, 2011 at 4:36 pm | Permalink

    One of the problems as lifelogic points out is that there are too many firsts, double firsts and blues in parliament who are adrift from the lives of others and may be wonderful in their achievements in their given field but are utterly useless in decision making and running a succesful economy. 98% tax was theft by the state. Salaries are for families who work to earn them and not to have huge percentages taken off them to be squandered on political projects. What is needed is a more right wing government geared towards a succesful economy for our people, not what we have which is an economy to suit the EU and the rest of the world who come here by the thousands and can expect more than our pensioners and free housing thrown in

  6. Mike Stallard
    Posted April 29, 2011 at 4:43 pm | Permalink

    Marie le Pen – France’s BNP leader – said that Free Trade meant “Their slaves selling the things they have made to our unemployed.”
    Ordinary people just cannot compete with slavery. It is the small businessmen who get squeezed either into pushing their workers into slaves too …. or else just shutting up shop.
    Meanwhile the slave owners get much, much richer.

    In this country, it is the government which attracts youngsters either as employers or “clients”.

  7. Alte Fritz
    Posted April 29, 2011 at 5:37 pm | Permalink

    My knowledge of the Chinese is derived from my son, many of whose school fellows are from mainland China as well as Hong Kong. Anyone who thinks China is losing its edge should meet them. There is a discipline, even steel, in these teenagers which is impressive. They are not ready to throw in the towel and they are that country’s elite twenty years or so hence.

    Interestingly, hardly any of them take soft subjects, mostly sciences in fact.

    • lifelogic
      Posted April 30, 2011 at 11:57 am | Permalink

      Indeed it is great that they do not all aspire to be civil servants, lawyers, regulators and politicians the world need more of them just like it needs more of the Liberal party policies.

  8. StevenL
    Posted April 30, 2011 at 12:17 am | Permalink

    20% wage inflation in China huh? Sounds like the deflationary impact of importing consumer goods from a cheap labour economy pegged to a weakening dollar is over.

    Brace for double digit price rises and 6% interest rates then. Pity those poor fools who took out bank rate + 4% mortgages, because house prices always go up, while your at it.

    Looks to me like the bull market in government bonds is almost over.

  9. Neil Craig
    Posted April 30, 2011 at 4:06 pm | Permalink

    The imminent collapse of the “unsustainably” fast growing Chinese “bubble” has been continually prophesied for at least 20 years.

    Meanwhile China has been growing its electricity capacity by 10% annually and unaccountably seen its economy growing at 10% annually. It is continuing to do so.

    Our electricity capacity is, if anything, declining and we have seen no growth since 2005, in which period China has grown 77%.

    Of course their government wants growth. We could more than match them if ours did.

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    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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