Author: shanhuang

China's Strategic Economic Structure Flaw in The Past 30 Years [Copy link] 中文

Rank: 8Rank: 8

Post time 2009-4-23 08:55:41 |Display all floors
Since the export market is and will always be small compared to the full potentials of the Chinese domestic market, profitability of productive enterprises can be sustained through an economy of scale to reduce unit cost. Such unit cost reduction can be achieved by rising productivity made possible by expanding sales volume in the domestic market. Export then will only have to pay for the cost of needed imports to maintain a balanced trade.

As industrial enterprises tap the growing domestic market, aggregate sales revenue will support wage rise as the portion of profit previously reserved by middleman foreign distributors and importers can now be use to support higher wages which in turn will strengthen domestic consumer demand. Some upward movement of prices should be allowed to adjust price gap between agricultural produce and manufactured products to raise farm income. A government price policy should be instituted to prevent destructive cut-throat price competition and below-cost dumping in both profitable and unprofitable markets. Excess profit should be taxed to prevent overinvestment in profitable sectors. Of special importance is to narrow the gap of wholesale and retail prices for farm produce to increase net income of farmers while holding down consumer prices.

To keep the 10 million migrant workers current being laid off by the export sector employed at an annual wage level of the equivalent of US$10,000 (CNY 68,490), a work creation certificate program of US$100 billion (CNY 684,9 billion) is needed. To keep the 10 million college graduates from unemployment, another work creation certificate program will be needed at US$100 billion. This is well within the financial capability of the Chinese economy as it amount to only 20% of the over US$2 trillion in foreign exchange currently held by China. It is important to understand that this amount is not fiscal spending, but sovereign credit that will be repaid as the economy develops.

China does not have to accept the fate of financial crisis made in the US, if Chinese policymakers have the courage to think independently and to boldly experiment with new approaches. To eliminate poverty, China must first eliminate a poverty of creative ideas among its policymaking circles overwhelmed by wholesale acceptance of voodoo neoliberal market fundamentalism propaganda.

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Rank: 8Rank: 8

Post time 2009-4-23 16:45:01 |Display all floors

Don't die rich?

China today is like Young David standing with a another sling over the fallen body of a stunned Goliath the Giant.

Not carrying a knife and owning only a sling, he doesn't know how to behead the Giant.

The Giant, if awakened from its stupor, will be even more relentless than before.

Another Republican president will reverse any possible diplomatic merits gained by the black president.

Chinese people's thrifty habits grew out of many longstanding cultural mores.

That's why Americans spend their money before they earn it and die poor.

Chinese save their money after they earn it and die rich.

The good thing about this is that they will never outspend what they earn.  

The bad aspect is that the domestic market is difficult to expand at a moment's notice unless huge financial stimuli or incentives are offered on a continual basis.

So long as the financial sovereign rights are still in our hands, there shouldn't be any problem modifying the oceanliner's course as we negotiate a sharp turn and expand both the international and domestic markets through innovative and consistent stimulus packages and supportive policies such as security measures in the three fundamental areas of health care, housing and education.

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Rank: 4

Post time 2009-4-23 16:52:48 |Display all floors
good points
life starts when you live with your heart

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