Jul 28 2008
The limits of China:
Very good article that explains the real limits of Chinese power down the road. Here’s a mix of his points and some of my thoughts on the matter:
- Cheap labor and fair access to markets is about their main strengths. Quality is not as important if the manufacturers can slide by.
- Labor is starting to price itself out of the basement, and the real dirt-cheap producers are looking elsewhere - like Vietnam. In some cases, the manufacturers are finding out that the endless parade of people in government wanting a cut of the action are getting to be endless. And expensive.
- Chinese aren’t innovating, they’re just cheaping things out. 99% of what they’re doing is innovated somewhere else, in regards to true innovation.
- They’re depending on massive, continuous, unending growth. This is impossible. Eventually, the growth is going to hit a limit.
- The Chinese - both people and manufacturers - are consuming huge quantities of raw materials, stripping their own country bare and polluting the heck out of it. Long before they’re done producing, the quality of life and the lack of arable, unpolluted land is going to smother them. Or upset the masses enough to say enough-is-enough.
- Health care is China is absurdly bad, and this and the pollution is going to catch up with them.
- The demographics are going to hell in a handbasket. Because of the one-child policy and the way it’s been implemented, there’s going to be a lot of unmarried guys unemployed and looking for work and women that aren’t available, and there’s going to be a ton of elderly with no visible means of support (in the hundreds of millions, reaching a third of a billion in the not-too-distant future). There’s no pensions as a rule or Social Security in China - you depend on your kids. What kids?
- Too much corruption means that there’s too much of a leakage on all costs - you put X amount into a business or a government project, and too much of it gets trickled off and too little gets done in an effective manner. This will only work out so long as the spigot is full and juicy. If it ever dies down, watch out. The inner contract between The Party and the people is that the gravy keeps rolling in, and the party controls things.
- Too much government control and corruption in government is a situation ready for a long-term collapse and a drying up of further innovations in favor of cash cows to keep the bribes flowing.
- The government is subsidizing a lot of things, such as gasoline and diesel, but this becomes a constant drain that can never be cut off without open revolts in the streets.
I thought I’d heard the end of orphanage-abuse stories for a while. 


