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The Perils Of Thrift

NEWSWEEK

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The IMF and other development agencies say Beijing could boost consumer spending power by transferring wealth held by state-linked enterprises to households by taxing businesses and either reducing taxes on households or expanding free social services. That strategy would address China's underlying imbalance, but only after a tough interim. "The fact that over the next five years China may be able to move in the right direction is great," says Michael Pettis, a professor of finance at Peking University's Guanghua School of Management. "But crises don't require five-year solutions, they require five-week solutions."

Whenever the solution comes, Chinese industry faces a painful retooling process during which the country's vast nonfarm workforce will experience a sensation largely absent since the days of Chairman Mao: systemic uncertainty. Only then will China's immoderations, like those of its favorite drinking buddy, be visible for all to see.

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Posted By: fernando1 @ 10/10/2008 10:26:19 PM

Why do Americans have such a war mentality? China is not a military threat to anyone only America is.
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Posted By: whaizhuang @ 10/07/2008 7:42:54 AM

to increase the domestic consuming of China will rely on the urbanization which has the precondition that there are so many transfering labours from huge countryside in China. But the process of urbanization is not comparable with that of economy development, in that industrialization can't provide appropriate percent non-farm payrolls opportunities for the transfering labours. In a word, China has a bad structure of industry in its economy and export-oriented industries has too large share. Why like that? Industry division and innovation are less, so industries has a small capacity of attracting labours.
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Posted By: gunner1023 @ 10/07/2008 6:01:43 AM

Reply to previous comment that is why the upcoming global depression will lead to Chinas elite to opening their pocket books to providing clothing, food, housing, and jobs to the people (massive military build up) so they can expand their ceilings by taking form the world what they cant produce domestically. This is just the start of what will eventually become the greatest and maybe the last conflict in human history. Look at history WWII stared in the shadows of the great depression times are strangely similar to those who have studied history. Look at the United States positioning itself in the region in recent year???s nuclear deals with India for nothing in return but tasty mangos. It look's as if we are trying to align ourselves with the second largest population in the world to use them the same way Britain and the U.S. used the former or should I say current U.S.S.R. in WWII. Military packages to Taiwan in recent weeks indicate rising tensions in the region. War is soon coming and no one in the world will be untouched by the events brewing in this caldron we call earth, so in the words of the Duke saddle up and get moving the war with the commies is on the horizon and the outcome is more than ever before in history uncertain.