Be not afraid…

Posted by: prolixous on: July 9, 2013

• In: China | Open Thread
• 13 Comments

Good morning Widdershins. For those expecting to see one of Fredster’s brilliant posts this morning, we have decided to play whack-a-mole in order to frustrate Edward Snowden wannabes. Regular order will return once Pat feels better and is back to her side-splittingly funny dead-eye accurate satire.

While there are oodles of stories crossing the airwaves, like the House’s consistent embodiment of the lyrics to Turn Back Time, the Zimmerman trial, or the FISA court, I’ve been reading some off-the-beaten path pieces.

Every pundit and their dog whines about how China is going to overtake the U.S. economy and it will be the end of life as we know it. If you ask me, it is just another stale bromide left over from the “Evil Empire” and “Axis of Evil” days where we had to have a shiny enemy to keep us from noticing trickle down economics just kept wetting itself.

China has some monstrous problems — and if history is any guide, each time they have let down the “Great Wall” over thousands of years, it has resulted in an eventual reinstitution of isolationism resulting from their inability to trust themselves. This time around the unanswered question is this: Have they gone too far, too fast, to be able to quell the lure of a middle class lifestyle?

The first article is China’s Policy Factory: The NDRC. The National Development and Reform Commission is a superministry dating back to 1952 and Mao Zedong where it was envisioned it would set production targets for everything from steel to wheat through Five Year Plans. It’s grown a bit since then.

With 30,000 red pencil wielding bureaucrats spread throughout China, the NDRC decides just about everything from the size of the Shanghai Disneyland (116 hectares, now under construction), to how thin plastic bags should be (no less than 0.025 millimeters), to setting gasoline prices and taxi fares, and recently used its sweeping power to fine China’s two best-known liquor companies $73.25 million.

With its plenary control over the cost of just about everything, it’s sorta like Wal-Mart without the yellow smiley face price guarantee.

The actions of the NDRC have come under attack on Chinese social media of late and there is a worrisome backlash to its actions. You see, China must have continued strong growth in its GDP in order to ensure sufficient jobs for the hundreds of millions of farmers expected to leave the countryside. Therein lies another problem, the shrinking available workforce in China.

Which brings me to the second article about Chinese manufacturing. The country’s one-child policy is taking its toll. The number of working-age Chinese in 2012 fell by 3.45 million, to 937.27 million. While that’s just a small drop, it’s the first decline since record-keeping began and marks the start of a trend expected to accelerate in the next two decades. China no longer has an inexhaustible supply of young workers.

There’s also something else at work. In 2012, 25 provinces increased the minimum wage by an average of 20.2 percent. The current five-year plan ending in 2015 calls for base wages to increase by an average 13% per year, part of a policy to address growing income inequality. (Wouldn’t it be grand if our government recognized the inherent dysfunction engendered by a 700:1 disparity in U.S. income inequality between CEOs and factory floor workers?)

The reason I think this is important is too often “China fear” is the subject of too many headlines spewed by politicians and just as often, the predicate of those headlines is, “a shopping list oiled up by military contractors.” Suffice it to say, China has huge problems facing an economy where governmental control must continue to be centralized, but where its heavy touch must be perceived as lighter and lighter to assuage a growing middle class.

So the next time you hear a whining “China fluffing” politician start a sentence with “We must be afraid, very afraid“ before he or she rattles off a shopping list from the military/industrial complex, remember China has a world of problems to say “Grace” over, that is, if they said “Grace.“

And here is an fun fact to know and tell, in their fiscal year just ended March 2013, Booz Allen Hamilton reported $5.76 billion in revenue, 99 percent of which came from government contracts — one quarter of which were from U.S. intelligence agencies.

What are you reading?

This is an open thread.

Tags: Axis of Evil, China, Ed Snowden, Evil Empire, National Development and Reform Commission