07-20-2004, 10:56 PM
<b>China as a paper tiger</b>
The biggest problem with China's economy is that its national accounts are in shambles and the accounting system is totally unreliable. Many china experts may not be aware that (apart from the absence of a credible justice system), there is no accounting or auditing system in China, whether it be for the corporate entities or for the government which controls the commanding heights of the economy with the army generals wearing caps as company managing directors or chairmen. If there is one area where China can do with Bharatiya expertise it is in recruiting Chartered Accountants and IT experts from Bharat (say, through TCS, Infosys and Wipro).
It is also no common secret that many of these generals have their numbered swiss bank accounts into which contract moneys get laundered rapidly.
One positive aspect of the economy is the speed which the contract packages for large scale development projects are organized and executed. To this extent, the loans channeled from the international financial institutions are very efficiently drawn down with limited time and cost over-runs. This is the only silver line for an otherwise overheated economy that the projects which may be highly inflated in terms of costs involving technological components, say, from Germany, are implemented with remarkable efficiency to the full satisfaction of foreign capitalists. The foreign direct investment regime also has been tailored to benefit the foreign capitalists who have virtually total freedom to take back the profits from equity investments in quick time.
Another silver lining is the high level of productivity of land which is virtually double that of bharatiya agriculture; it is notable though that the agro-economy is monoculture based on feedstocks for pigs and very little production of rice as a percentage of the daily nutrition content. China is able to supply a substantial requirement of food, pork and wool products to Russia using the Beijing-Moscow Trains and continuing to get the military industry supplied with the Russian arms technologies. The production of leather products, plastic products, bicycles, building hardware, small electronics and textiles continue to flood the American departmental stores
I hope members have seen the incisive articles which appeared in the Economist. I am reproducing a few samples hereunder, so that we can get a flavour of the perilous economic situation in the country which is all set for a hard landing. With the help of institutions such as the IMF, this hard landing will surely be hard, as it happened with the tiger economies of South East Asia when the investors withdrew their investments in concert, leaving the stock markets high and dry. IMF is already building up pressure for the devaluation of Chinese currency, curbs on bank lendings and generally, to slow down the growth rate.
Given the situation that 50% of the land area of China is Gobi desert, desperate attempts are being made to bring more areas under cultivation to re-settle the growing Chinese population living in abject subsistence conditions.
China's economy?
The great fall of China?
Time to hit the brakes
Kalyanaraman
The biggest problem with China's economy is that its national accounts are in shambles and the accounting system is totally unreliable. Many china experts may not be aware that (apart from the absence of a credible justice system), there is no accounting or auditing system in China, whether it be for the corporate entities or for the government which controls the commanding heights of the economy with the army generals wearing caps as company managing directors or chairmen. If there is one area where China can do with Bharatiya expertise it is in recruiting Chartered Accountants and IT experts from Bharat (say, through TCS, Infosys and Wipro).
It is also no common secret that many of these generals have their numbered swiss bank accounts into which contract moneys get laundered rapidly.
One positive aspect of the economy is the speed which the contract packages for large scale development projects are organized and executed. To this extent, the loans channeled from the international financial institutions are very efficiently drawn down with limited time and cost over-runs. This is the only silver line for an otherwise overheated economy that the projects which may be highly inflated in terms of costs involving technological components, say, from Germany, are implemented with remarkable efficiency to the full satisfaction of foreign capitalists. The foreign direct investment regime also has been tailored to benefit the foreign capitalists who have virtually total freedom to take back the profits from equity investments in quick time.
Another silver lining is the high level of productivity of land which is virtually double that of bharatiya agriculture; it is notable though that the agro-economy is monoculture based on feedstocks for pigs and very little production of rice as a percentage of the daily nutrition content. China is able to supply a substantial requirement of food, pork and wool products to Russia using the Beijing-Moscow Trains and continuing to get the military industry supplied with the Russian arms technologies. The production of leather products, plastic products, bicycles, building hardware, small electronics and textiles continue to flood the American departmental stores
I hope members have seen the incisive articles which appeared in the Economist. I am reproducing a few samples hereunder, so that we can get a flavour of the perilous economic situation in the country which is all set for a hard landing. With the help of institutions such as the IMF, this hard landing will surely be hard, as it happened with the tiger economies of South East Asia when the investors withdrew their investments in concert, leaving the stock markets high and dry. IMF is already building up pressure for the devaluation of Chinese currency, curbs on bank lendings and generally, to slow down the growth rate.
Given the situation that 50% of the land area of China is Gobi desert, desperate attempts are being made to bring more areas under cultivation to re-settle the growing Chinese population living in abject subsistence conditions.
China's economy?
The great fall of China?
Time to hit the brakes
Kalyanaraman