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This post was edited by abramicus at 2015-9-23 11:59|
Overall, well written.
However, Consumption-Driven Economics is unsustainable.
Because when consumption leads production, the shortfall must come from three sources, none of which is sustainable.
(1) Spending one's savings, including the country's foreign currency reserves - when they are gone, or even earlier, when their total drops below the total of foreign-denominated debts, there is nothing left to spend, and therefore nothing left to consume, and thus the consumption-driven economy will fail.
(2) Spending what one borrows, which follows after one has spent one's savings and foreign currency reserves - when foreign creditors raise their interest rates higher than what the Chinese borrowers can pay, these borrowers become bankrupt, and their workers are laid off, and thus the borrowing ceases - and this too is unsustainable.
(3) Spending what one steals, which is the only option left after savings are gone and borrowings have drief up - forcing other countries to accept one's currency as payment for its goods and services, i.e, forcing other countries to accept Yuan as their reserve currency, requires a military force 10 times what China currently possesses, and if this military might is not created first, to engage in this kind of highway robbery only invites China being challenged abroad, and attacked at home, which is unsustainable as far as economic growth is concerned.
Therefore, to tell the China-haters that China is committed to a Consumption-Driven Economy is about as energizing to them, as to declare that China is committed to national suicide, and that they can count on it, on the honor of the Chinese government. Naturally, they will be even tougher on China on every front, knowing that China will eventually cause its own collapse that it would be powerless to reverse by the time it realizes its mistake. Why then should any foreign leader give China any slack? No way, because there is no such need.