via Zero Hedge:
University of Texas professor James Galbraith discusses one aspect of China's "booming" economy, specifically the question of China's Trade Surplus, which as he notes has been drastically inflated since 2002 due to Chinese companies over-reporting profits on exports in order to disguise various investments by foreigners into China, so as to beat capital control restrictions.
Galbraith argues the "fake profits" are so large that China may have actually ran a trade deficit in some years, and these figures casts serious doubt on the reported P&L of Chinese companies.
Dette er veldig interessant; Kina er et eksempel mange som gjerne vil hevde at ikke alt er bæsj i verdensøkonomien trekker fram. Og Galbraith har førstehåndskjennskap til Kina... jeg bare må sitere fra hans diskusjon om Kina i The Predator State:
[R]eal wages in the exporting regions -- wages measured in terms of the consumption goods they provide for -- are not low at all by the larger standards of working populations in the developing world. [...] Working people in Chinese cities are largely fit, literate, and well fed [...]
How do the Chinese achieve this? Not by planning, and not by avoiding the competitive pressures of the free market in consumer goods. Quite to the contrary: China enjoys the largest number of small producers and the most diverse and competitive consumer marketplace on the planet. Correspondingly, many of these firms performs as the competitive model predicts: they earn profits rarely, losses often.
How then do firms survive? Why does China prosper? How can it continue to grow at reported rates near 10 percent, through the Japanese depression, the Russian crisis, the Internet bust? The answer is, once again, not to be found in the trading agreements so much as in the structure of financial control. For in this area, China benefits form its underdevelopment.
A key and unique feature of the Chinese scene is the relative absence of a developed market for capital assets. Such markets -- for stocks and corporate control -- do exist; indeed the Shanghai stock market went on an epic run in the mid-2000s. [fotnote: The fuel behind the Chinese stock and real estate booms remains open to analysis. One possibility is that after certain financial liberalizations in 2002, firms inflated the value of Chinese exports in order to evade capital controls and bring funds into the country. If true, this would explain several otherwise strange phenomena, including mysteriously high reported profits reported by some major Chinese firms and the astonishing rises in the reported trade surplus and fixed investment as a share of Chinese GDP.] But the capital markets have limited scope, limited liquidity, and limited power. Most firms are not publicly valued and not easily traded; in this important sense, "property rights" in the firm are limited. Diverse ownership form and relatively small scale are especially characteristic of the vast array of consumer goods producers that now dominate manufacturing in southern China. Though formerly owned by villages and townships in many cases, they have been recently privatized -- sold off to managers or worker's collectives -- not because they are profitable but because they are not. Selling them off removes their direct claim on the local budget.
In these circumstances, capital markets do not excercise discipline over the medium-term financial performance of manufacturing firms. Firms can run losses, and their shares do not collapse, and their managements are not replaced. When they run profits (with difficulty, but it does happen) their managements are not enriched per se; there is graft and there is speculation, but there is relatively little possibility, for most excecutives, of selling out and retiring on the proceeds. To make money in this situation requires preserving the enterprise as a going concern. And that means passing whatever financial scrutiny would otherwise cause the firm to lose credit and to be shut down. In China, this scrutiny is extremely weak.
[...] This competition results in a chronic glut in consumer markets. This is evident in the fact that sidewalks across China are covered with stalls. Price competition is phenomenal, as any casual visitor can find out: with minimal effort, prices will fall to a tenth or less of the original offer. There is little possibility that such prices cover the fixed costs of those who produce the goods on offer.
Is there any way for the Chinese manufacturing firm to turn a profit? Yes: the alternative to selling on the domestic market is to export. [...] [T]he optimal strategy for earning a profit is to aim, atleast in some ultimate sense, for export. It is to produce and produce, gaining practice, improving quality, and demonstrating reliability -- in the hope of eventually selling part of production on the export market -- perhaps first to some low-income venue such as India, later to middle-income countries such as Turkey or Mexico, and ultimately to the United States and Europe. For this, labor must be treated as fixed cost. That is, production must continue regardless of demand. The strategy will be defeated, from the beginning, if firms must interrupt production and dismiss workers simply because the output they are producing cannot be sold immediately at the Wal-Mart price.
So what to do with the output that cannot be exported? The answer is already stated. That output is dumped on the domestic market at whatever price it may command. The imperative to the small shopkeeper inside China is not to earn a profit; it is to unload product, because more will be coming from the factory soon. And the result is falling prices (deflation) for Chinese consumers. Relative to a fixed money wage, this implies a rising real wage in terms of staples. The result -- well-fed, well-clothed citizens and a near absence of visible human depravity in the cities -- is visually evident to any observer.
[...]
China reproduces, more closely than capitalist countries do, both the theoretical dynamics and the public welfare implications of the perfectly competitive market. It does so precisely because it lacks the essential feature of advanced capitalism, a fully developed market for capital assets. Such markets are under development -- if China truly lives up to commitments made under its World Trade Organization agreements to liberalize its financial sector -- and one may confidently predict that if it becomes fully developed, the Chinese model will go into crisis, and progress will stop -- as it did in Latin America, Eastern Europe, and elsewhere in Asia. But for the moment, the Chinese appear to have that impulse to self-destruction under control. (s 82 ff)
Jeg har utelatt Galbraiths kommentarer om bankenes rolle i systemet... Skrev av manuelt fra boken, for lat til å ta med mer...
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