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China Rises

I came across an item, written by Jared Diamond, on the New York Times website recently.  Although it was a few years old, it struck me that if it was correct then it is probably as relevant now as when it was written.  Just to satisfy my curiosity I looked further and sure enough dug up more items which fitted in with the first.  Of these the most notable is an article written by Michael Pettis on his blog, China Financial Markets, entitled The difficult arithmetic of Chinese consumption, published a little later in 2009. In essence most of these articles  talk about the rise in consumption of China, of the problems which may arise from this and how they should be dealt with, but looking at the figures used I couldn’t help wonder if they were not looking at the situation the wrong way round.

Let me explain what I mean.  In 2008 the gross domestic consumption of the PRC [Peoples Republic of China] was $1.2 trillion – that is, two digits followed by eleven zeroes. By comparison consumption in the UK [United Kingdom] in the same year was $1.4 trillion and in the US [United States of America] was $9.4 trillion.  All big numbers to get your head around.  So it seems that Britain consumed slightly more than China but quite a lot less than the US, but then that is a bigger and more wealthy country.  But are these reasonable comparisons?  If, instead of using total consumption, we compare consumption per person possibly we might have a more reasonable figure to look at, after all there are substantial differences in population; 1,300 million, 304 million and 60 million for the PRC, US and UK respectively.  After dividing the figures these are the rates per capita for the year 2008  –

PRC     $923

UK       $23,333

US       $30,921

Think about it for a moment.  On average a British citizen consumes 25 times as much and a US citizen 33 times as much as the average person in China.  This may not sound much of a difference when compared with, for instance, the income of the wealthiest family in Britain with the poorest family but these are averages, not extremes.

For a moment let’s turn the situation on its head.  If the rate of consumption in China were the same as that in the UK it could only support a population of 51,428,571 and if it were the same as in the US the population would be only 38,808,510.  How does that compare with the present PRC population of 1,300,000,000?

Turning the figures round yet again and dividing the total consumption of the UK and the US by the consumption rate of China will give us some idea of how many people can be [financially] supported in these two countries – in Britain 1,516,666,666 Chinese consumers and the US 10,183,332,484 Chinese consumers.  These figures are nonsense, of course, as they represent more people than live in the entire world and more than the whole world can probably support –  but what if certain countries decided they wanted to live as we do?

I think you get my point, that with such a huge disparity between countries we cannot expect to continue, unchallenged, living such an extravagant lifestyle as we do now.  Sooner or later our standard of living will change. Downwards.  As to what the answer is, invade their countries [again], nuke the buggers, or bring a bit of moderation and realism to the western world, who knows,  that’s a question for the political leaders and experts to decide.

Related posts – “Future Masters

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The ‘b’-word

blindman.jpgThe ‘b’-word has been mentioned in the press. Again. At the time of Mr Spielberg’s disengagement with BOCOG there was some talk of boycotting the 2008 Olympics in protest over China’s involvement with Darfur, but it then faded away. Since the recent troubles in Tibet the topic has been revived and the notion is now being discussed amongst some European political circles. I’ve said once before that not going to the 2008 Olympics seems rather foolish after going to all the trouble of awarding the games to Beijing in the first place and I still feel the same way so perhaps a little clarification is necessary.

 

 

Does anyone remember the 1980 Games, held in Moscow? That year the USA persuaded many other countries [about 60, I believe] to join it in boycotting the Moscow games in protest at the Russian invasion of Afghanistan. The games went ahead as planned; the only disappointment for the spectators was that the records were not pushed as far forward as might have happened if everyone had participated. The conflict in Afghanistan continued for another 10 years and the only people to have been affected directly from the action were those athletes instructed by their countries to not participate. Did the boycott achieve much? Well, the following Olympic games in 1984, and held in Los Angeles, were boycotted, tit for tat, by the Russians and that is the only result I am aware of. Not long ago Prime Minister Brown boycotted the EU Conference in Lisbon as President Mugabe [of Zimbabwe] had been invited to attend. I’m unsure what Gordon Brown hoped to achieve by that, teach Robert Mugabe a lesson and scare him back home perhaps, tell Europe that Britain and Zimbabwe don’t mix maybe, I can only guess. What I do know is that he scored a resounding silence with this fatuous gesture. So much for the power of the boycott.

 

Looking at this from a slightly different angle, in what way are the British public and other westerners getting involved in this matter. Are they boycotting Chinese goods? Refusing to buy anything with a ‘Made in China’ stamp on it? Are western businessmen withdrawing from deals struck with Chinese enterprises? Have our ministers refused to attend trade missions in China? Have we advised all tourists to not travel to China? No. Really? In fact, for the rest of the world it’s pretty much business as usual. So why must athletes be singled out to bear this message of disapproval to China and have their years of training and hopes sacrificed? At best this can only be described as an exercising of double standards, but at worst it is nothing short of gross hypocrisy.

 

In the b-camp there are some who are convinced the way forward is to stage an all-out boycott and there is some logic in this as only a boycott supported by the vast majority of participants could effectively stop the event from being staged, but there are others who take what they see as a more pragmatic and moderate view. Instead of denying athletes the opportunity to compete they say we should go ahead and attend, as planned, but boycott the opening ceremony. And if that wouldn’t teach them a lesson I don’t know what will!

Related posts – Xizang, Take Note.

 

Future Masters

Some people have been talking about it, many others have been ignoring it, the majority still haven’t got their heads around it but it is happening now.

When China began its current economic revival and subsequent march to power for most people, myself included, this was something unimportant. It was happening thousands of miles way on the other side of the world. In those dim and distant days – all of 5 years ago – the word ‘China’ was scarcely mentioned in the newspapers and when it was it would probably be with a small ‘c’ and more likely to refer to a set of cups and saucers than a country or nation so how could we know? Things have moved on since then and the ‘C’ word has moved from the occasional mention each year, to every week on the national news and now to almost every day. Most people are concious of China but very few seem to have grasped the dimensions of this phenomenon.
In the 1970s something similar happened in Japan and the impact is still being felt, but it would be enormous mistake to imagine that China’s rise to economic prosperity will be on the same scale, just another phase we can live through and then shrug off. There is a huge difference in the size and potential power of these two places which have implications for everyone. The population of Japan is not a great deal more than that of the UK so for such a small nation to have made such an impact is something of an achievement. But what if the same thing were to happen with China? Just consider the dimensions of China. It is not the largest country in the world but to travel from East to West, by train from Beijing to Kashi for instance, takes over 3 days and North to South would be something similar. Everyone knows the population of China, officially 1.3 billion [maybe more] – that’s 1,300,000,000 – but what we don’t seem to understand is that this is more than 20% of the world’s population. By comparison the UK has less than 1%. If everyone in China wanted a pair of rubber boots this year there wouldn’t be enough rubber to meet that demand, let alone keep everyone else happy. Even the slightest hiccup in China can have an impact on everyone else. If there is a statistical shift in China it will affect statistics on a world scale; if there is a similar shift in the UK it is highly unlikely anyone else will even notice. It is the enormity, and the differences in culture, of the place which has lead several western companies to come unstuck when dealing with the PRC as they have mistakenly treated it as just another minor player in the world.
For years we, in the west, have been happily closing down our factories and moving production lines overseas. The theory was that it was cheaper to manufacture in other places therefore the goods would be cheaper for us. Hong Kong [when it was colony], India, Malaya, Thailand, Myanmar have all played their part in this process and many still do but the ultimate move was to China with its never ending supply of un-unionised, unrepresented, unregulated and unprotected dirt-cheap labour. Until now many of the items bought from China have been designed, sourced and marketed by western companies, that way they could at least argue that they were keeping the biggest slice of the profit. Our retail outlets are flooded with goods with the ‘Made in China’ mark but branded with western names. The one area where the China economy is weak is in branding – how many of us can name a global Chinese brand. Answer, none; there aren’t any, well not up to now.

Another angle to consider is the value and power of the Chinese ¥ [Yuan]. At present it is seen as an undervalued currency and many western powers have been pressing the PRC to revalue the RMB. So far China has resisted such efforts. Another factor to consider is the rate at which money is saved in the PRC. At present the average Chinese citizen saves 40% of income every year – by contrast the average citizen of the UK is £3,175 in debt. Overall, China saved approximately 50% of GDP, about $1.1 trillion, in 2007, the US managed to save 13% of GDP, about $1.6 trillion, although the US economy is 6 times that of China. This pattern of behaviour is reflected throughout the Chinese economy with private companies and the government itself following suit, storing money for the proverbial rainy day. In recent weeks a Chinese company purchased a French vineyard, a modest move and not an earth shattering event in itself but something quite new demonstrating that China does have an interest in the world beyond its borders. What would happen – or should I say what will happen, as this event is now so close as to be almost inevitable – if the PRC waited until it controlled the biggest slice of manufacturing in the world and then re-valued the RMB, just as we want them to? This would certainly make Chinese goods more expensive for western countries, but, hey ho, why should they care, with manufacturing neatly tied up and under control their customers are certainly not going to do a runner, that simply wouldn’t be an option. More importantly, the RMB, combined with the reserves held by the PRC, would then have the power to enable the Chinese to wander the world and go on an acquisition spree. No need to limit purchases to crappy little vineyards, we could soon find that our railways, power companies and banks were owned by PRC Plc.

What happens when China finally makes its marketing breakthrough and begins selling goods manufactured in China, with Chinese brand names and sold on the global market as it surely must? I don’t know the answer to this question and I’m not convinced anyone else does including our dear leaders, I can only speculate and posit ideas but the thoughts which come to mind are not encouraging. Our share of the profits will diminish drastically, that much is certain, we will eventually reach a point when we can no longer expect to buy at such low prices from the PRC and we will not have the financial clout to ‘buy whatever the price’, and then what. We will buy from somewhere else? But where? There isn’t another country in the world which could take the place of China. India might have been a possibility but we had our fling in that subcontinent a while ago. While we have been sitting around admiring ourselves and thinking how savvy and successful we all are President Hu Jintao and his pals have been beavering away around the world developing relationships and securing resources for China’s future. Many of the rogue states of the world, which coincidentally hold the key to much of the mineral wealth of the planet, are safely in China’s pocket so our options are reduced yet further. I’m sure someone somwhere with a little more inside knowledge than myself could enlighten us further as what has been happening and what, in all likelihood, will happen soon. All I know is that I am typing this article while sitting at a desk in the UK, using a PC manufactured in the China, and sold with a Chinese brand name from a British retail store.
“Greetings, Master” in Putonghua [Mandarin to you and me] is 吾皇万岁万岁万万岁; now might be a good time to start learning.

"Come Back To Afghanistan"

Here is another book giving a different angle to mainstream media to help you fill in more spaces of the Middle East jigsaw puzzle.

The author, Said Hyder Akbar, was born in Afghanistan, left while he was a child during the Russian occupation, moved to Pakistan and then to the USA with his family. He comes over as a mixture of Afghan but with a strong US flavour; which gives him valuable insight into why things happen as they do, why they don’t work, why some ideas were doomed to failure before they started, plus a few hints as to why the US government seems unable to learn from its calamities.

Come Back To Afghanistan is both an entertaining and informative read

"Murder In Samarkand"


This is not exactly a ‘hot off the blogosphere’ posting as the book I have just completed reading was published several years ago. However, the lessons to be learned are as horrifying and as relevant now as they were in 2006. Just as Mr Murray states in his book many of us believed that being British came with certain values, fairness, justice, protecting the vulnerable and standing up to the bullies for instance. In the past we haven’t always managed to live up to these ideals but we tried. Now it seems that these things no longer matter, at least to our government, as it supports despots, accepts torture as an acceptable method of obtaining ‘intelligence’ [it made an attempt to get this idea on to the statute book only a few years ago, the only thing which stopped it was a group of Law Lords], repeatedly suppresses the truth and uses fabricated evidence to justify actions or achieve other ends. Does this sound like something good that you would want to tell your international friends about? If you want some insight into the way our government [and I cannot stress ‘OUR’ enough] is going and why, then reading this book ‘Murder in Samarkand’ is a must.

While not everyone would approve of Craig Murray’s personal behaviour it is hard to see how anyone who believes in the truth can ignore story as it demonstrates how spin, convenience, expediency and the lack of truth have permeated our government.

In the early days of his posting his first concerns were to raise the profile of the British Embassy in Uzbekistan and make it better known amongst the British businesses which were attempting to operate there and achieved considerable success in this area. However, it was not long before he began to come across signs of corruption within the country and his attention was absorbed by other matters. This was bad enough but the most disturbing facet of this episode was the cold silence of the Foreign Office to his reports. In time the silence became more active and attempted to shut him up. The British government were following that of USA who were propping up the dictatorship in Uzbekistan as a partner in their War on Terror; it was therefore up to the Ambassador to keep relations sweet and avoid anything less pleasant. Truth simply didn’t matter. This conspiracy to silence existed all the way to the very highest levels of the Foreign Office, allegedly including the Secretary of State himself. During Mr Murray’s time in Uzbekistan the American government was running its Extraordinary Renditions programme, shipping arrested people to secret places around the world, one of which was Uzbekistan and, it is alleged, our government had an active part of this process. This is a story of cynicism, cruelty, terror, torture and murder and involves the author in several close and unnerving encounters of his own. If this were a thriller it would certainly sell well, but this is not fiction. If you want to see just how much politicians are prepared to debase themselves and the values of their country, read this.

Craig Murray is now the Rector of Dundee University.

Global Warming? Re-adjust the clock!

This one is just so smart I have no answer. The warming of the atmosphere has a very straightforward explanation after all, you just need to open your eyes to what is going on around you and it becomes obvious.

All the interfering with natural processes which we do obviously has its consequences, and fiddling around with the time, as we do each year to ‘save’ daylight, is no exception. Read the full article here and here.

I heard, on the radio, that the writer sent this in to a local paper as a hoax; I don’t know if he/she expected it to be published but the Arkansas Gazette seems to have swallowed it hook, line and sinker.

France and America

french-flag.gif

Q. What is the difference between France and America?

A. France has a President who speaks fluent English.