Taiwan: Would War be viable?

[Mr. Harley]

India may do better than China - India is instituting an actual Rule of Law, and a degree of Coorporate Governance. They have actually grown more per dollar invested than Chine since the 1990's. There was less investment due to structural barriers that India has largely dealt with.

Chine on the other hand is still appalling corrupt. India also has corruption, but in China they get to buy the courts, and that is an even larger problem. Foreign businessmen have been imprisoned on trumped-up charges when they have gone to a so-called joint venture, that has been de facto seized by their Chinese partners.

India has a much better University system, and is doing an excellent job of becoming a major center in Software. Since microcomputers have largely become a commodity item, software is where real value-added economic growth will come. They are also starting to deal with the various government subsidies/protections/supports of some of their industries and are becoming better, and more competitive, at hard goods production.

India's big problem is that it does not have a handle on it's population growth, and that could be what derails it's growth. Unless they do, a burgeoning rural underclass, migrating to cities, could become a powderkeg. In both cases - Chine and rampant corruption, India and population issues - the leaders that appear will determine how they deal with those problems. Sadly, I see no leaders in the US that are making any effort to deal with our problems, which is why we have a declining standard of living for the Mean/average American (look at Healthcare, college, etc.). I hope I am wrong.

[GePap]

I think China has too much of a head start on India. India may make software, but increasingly China makes the hardware- more importantly, software industries don;t employ hundreds of millions. I don;t believe you can skip the industrial phase on your way up, and India is way behind China in manufacturing.

I have not seen much from India either when it comes to energy production- China, at huge environmental costs, is on a damn building spree, and has plans to at some point start opening 2 nuke plants a year for 40 years. The Chinese have also gotten a huge jump on securing commodities. Things are going to be expensive for India since China has driven prices in commodites straight throught the roof.

BUt I agree that laws are one of China's greatest problems. The single biggest problem I think is land reform- the Chinese peasant needs to be made the owner of their land, giving them the ability to borrow against it and so forth.

[Mr. Harley]

GePap, I hadn't commented on securing commodities - many other posters had done so. India is actually starting to do some world-class manufacturing, and they have one advantage - English. Mandarin is a much harder language to learn unless you come from SE Asia, where you have the polyphonic languages.

Land reform in China is tied to another problem. Many of the farms really cannot support a family except at the barest sustenance levels. Lack of infrastructure, size, etc. China is caught between a rock and a hard place. Too much land reform and you will get consolidation as peasants try to move off the land - and many of these people are truly peasants, the government has done little to educate them, and the local party authorities have as much or more control over their lives as a medieval lord - into the cities, where there is already a huge migratory work problem.

Yet China doesn't want labor reform either, their entire manufacturing "miracle" is built on the back of exploited workers, much as the same happened in England and the United States during the Industrial Revolution. I think China is much more suspect to bad leadership causing a major disaster than India, centralized leadership always has that danger. India, if it can avoid the population bomb, has a much better chance of avoiding a crisis - unless Pashtun militants gain control of the Pakistani governement, and in that case we get to see what a nuclear exchange looks like.

[GePap]

I agree India might be more stable, and as I said before, I also think India will one day surpass the US, but I definitelly think China has a hueg head start and I don't see India catching up to China for a long time- India is already on the cusp of passing China in population, and nowhere near China is curbing growth.

As for Manufacturing and Indians speaking English- that the thing, most indians don't speak english, as far as I understand it- and you really don;t need your bottom laborers speaking anything really, as long as you have cadres of managers and import/exporters who can. China is also China is closer to its markets in the US than India is, and IK think has laid down a better coastal infrastructure for manufacturing.

For an intersting counterpoint to myself, I found this strange little article in a publication I never heard off...

How India can overtake China

March 16, 2005

What are the lessons from the Chinese economic miracle for India? Who is likely to win the race for economic growth -- the hare or the tortoise? These are the questions I will take up.

I have maintained that there are greater similarities rather than differences in the policies followed and their outcomes in both the periods of economic repression and reform in India and China.

China carried its repression further as it has its reforms than India. But in both countries the liberalisation of foreign trade and the ending of planning gave a boost to growth.

The major difference has been in their respective investment rates, with China's at over 40 per cent of gross domestic product being roughly twice that of India's.

But, given the continuing deadweight of the SOE (state-owned enterprise) leg on the Chinese growth path, this has not led to a commensurate difference in their growth rates during their reform periods, with Chinese growth between 1978-98 being 9.7 per cent per annum on official and over 7 per cent per annum on the best independent estimates, whilst India grew by 6.1 per cent per annum from 1991-2000.

But the growth in China has been more labour intensive than India's. This was the unintended consequence of the end of collectivisation in agriculture which led to an explosion of labour intensive small-scale rural industry for export.

This export led industrialisation was facilitated by the much better and more extensive infrastructure created in China, and by the freedom to hire and fire as well as the absence of any 'social' burdens carried by firms in this fast growing non-state sector.

India by contrast continues to hobble the development of small-scale and labour intensive industry with its policy of reservations, and refusal to repeal the archaic labour laws it inherited from the Raj.

In both China and India the dynamics of their growth have been provided by areas which the State had overlooked as being of little importance: the small-scale rural industries in China, and the information based service sector in India.

These were the areas where capitalism was allowed to take its natural course and once foreign markets were opened with the liberalisation of foreign trade, the native wit and entrepreneurship of the economic agents not subject to the dead hand of the State, generated a dynamism which no planner could have created.

Unlike the Indian, the Chinese policy elite has fully embraced capitalism. The new (often Western trained) mandarins who run the Chinese state recognise, as many in India still do not, that this is the only route to both prosperity and power for their nation -- and like mandarins of yore, it is the Chinese State and not any ideology that they serve.

They are desperately seeking ways to remove the remaining vestiges of their dirigiste past: the loss making state enterprises.

India by contrast seems stuck with its 'Left' still unwilling to abandon its past dirigisme, who continue to block the necessary privatisation of its public enterprises.

These differences in the embrace of global capitalism are reflected in both the much greater trade liberalisation undertaken by China and its more relaxed attitudes to foreign investment.

Thus whereas exports were 19 per cent of Chinese GDP in 1998, they were about 8 per cent in India. Whilst the stock of foreign direct investment was $261 billion in China in 1998, it was a mere $13 billion in India.

Moreover, the foreign investment in China which has flowed to the non-state sector from the Chinese diaspora to finance industrial exports has loosened the constraint on its growth from its weak domestic capital markets.

The multinationals, by contrast, have been lured into joint ventures with state enterprises to service the large domestic market and have usually lost their shirts (see Tim Crissold's account in Mr China, and Y Huang: Selling China).

In both countries wherever growth has occurred there have been dramatic reductions in poverty. However whilst labour intensive industrial growth seems to be spreading faster to the hinterland in China through fierce locational competition for joint ventures with foreign investors, the Hindu heartland in the eastern Gangetic plain still remains mired in its ancient equilibrium.

While inequality had increased in China since the planned period, there is no clamour in an ostensibly Communist country for egalitarianism. This is because like India, China for millennia has been a hierarchical society.

It was the foreign Enlightenment virus of socialism which for half a century infected their intelligentsia, but whereas the Chinese seem to have overcome it, India's intellectuals unfortunately still remain deeply infected.

From this it would seem that there is no contest in the growth race between the hare and the tortoise. But there are some signs that appearances maybe deceptive.

India's financial system is healthier, but it shares with China the problem of unsustainable fiscal deficits fuelled by economically unjustifiable subsidies.

China might be able to tackle this problem more easily if it used its foreign exchange reserves creatively. By contrast, the political roadblocks to ending the subsidies debauching the Indian budget remain significant.

Nevertheless, India currently has a head start in both the instruments it can provide for savings as well as in the mechanisms through the financial system for their efficient deployment.

There are two other advantages that India has over China as part of the legacy of the Raj: the rule of law, and the English language.

Even though China has in the most recent revision of its Constitution put private firms on an equal footing as state owned firms, entrepreneurs are still suspicious of the State.

When Forbes recently published a list of the top 50 Chinese millionaires, the individuals complained, as the tax authorities showed an interest.

It explains why most of these new entrepreneurs rely on self or foreign financing of their firms and are reluctant to put their head above the parapet by listing their companies on the stock exchange. This cannot bode well for the future of Chinese growth.

India's advantage in having a large pool of English speaking people is likely to be eroded in a generation. Apart from the much higher literacy rate in China, it has now decreed that everyone from the age of five will have to learn English -- the commercial and scientific lingua franca of the world.

Given its fiercely meritocratic education system, without any quotas or affirmative action, it is on the way to producing one of the most highly skilled populations in the world.

This is a danger India needs to guard against, by helping the spread of private schools in the rural areas and abandoning the Mandalism which has already done great harm to its system of university education.

If affirmative action is extended to the private sector, it would further handicap India in its ongoing race with China.

Last, but not least, whilst China with the ageing of its population is likely to see an end to the savings bonanza promoted by the demographic transition accompanying its one child policy, when the dependency ratio declines as the birth rate and population growth rate fall, India is just entering its own demographic transition.

These life cycle effects will raise Indian savings for the next few decades. This should allow a substantial rise in India's investment rate, just as after 2010 demographic effects lead to falling Chinese savings rates.

If by then India has completed the second generation of reforms, built up its infrastructure and fully integrated itself into the world economy, we might find that the tortoise overtakes the hare.

This race between the two Asian giants is set to be the most dramatic event of this century.

http://www.rediff.com/money/2005/mar/16guest.htm

[Patroklos]

History shows us that no power remains on top. No power keeps their number one place for ever. The Egyptians, Assyrians, Babylonians, Persians, Greeks, Chinese, Romans, Arabs, Turks, French, English, ALL of them have seen their time of power wane and end, to be surpassed by another power, for a variety of reasons.

Excellent, we should have a good two centuries left in us then.

[Velociryx]

Oh here we go again.

First: Stating that the US (current dominant singular economy) will, at some point, lose her position as the dominant singular economy is NOT the same thing as claiming that any other singular, individual nation will eclipse her.

It is an open-ended statement for a good reason, that being, that history is not set. It hasn't been written yet. It is fluid.

Using history as a guide, we can clearly see the trend you pointed out (top dog eventually gets replaced by a new top dog).

What cannot be predicted with any reliability is WHO, precisely, the new top dog will be.

I have agreed from the start that China (and India) both have the potential, but their ability to surpass the US economically is not assured. It revolves around continuing to do lots of things right, avoiding pitfalls that have caused meltdowns of a NUMBER of other developing nations along the way, and the contending with the US's own solid and continued growth. There are a number of things that can delay or outright derail their continued growth. You seem content to downplay or ignore that kinna stuff, and that's your bag. Entirely your choice.

I choose to look at the economic reality that growing an economy from where both China and India are today and KEEPING them on the right path is no trivial task, filled with pitfalls and uncertainties along the way.

Only history will tell the tale.

This statement is true because the reality is that it's too soon to tell, and certainly NOT "inevitable" no matter how many times you repeat it to yourself.

-=Vel=-

[Sandman]

Originally posted by shawnmmcc
India has a much better University system, and is doing an excellent job of becoming a major center in Software. Since microcomputers have largely become a commodity item, software is where real value-added economic growth will come. They are also starting to deal with the various government subsidies/protections/supports of some of their industries and are becoming better, and more competitive, at hard goods production.

On the other hand, India has a dreadful record on primary education, compared to China. Female illiteracy, in particular, is still high in most parts of the country. India's university system is far larger than a country at its stage in development needs, especially when large swathes of the population can't even read or write. Graduates often end up unemployed or underemployed. Basically their education system is top-heavy, possibly as a result of the caste system.

[molly bloom]

Originally posted by Velociryx
Granted, there were lots of reasons for leaving.


Of the groups you mentioned, however, only the slaves and the prisoners were not "fleeing to" the US....the rest, for whatever the reason, decided that they'd better get out while the getting was good, and....they did.

Yes, but you explicitly stated that the main reason was a form of 'socio-economic' bondage.

Religious dissenters, for instance, weren't fleeing socio-economic prisons, they were seeking to set up their own versions of New Jerusalems- and freedom to trade or freedom to do anything else, other than to worship in their own way, was hardly foremost in their mind.

Democracy was, after all, an alien concept to the Puritan, Calvinist and Presbyterian settlers of English descent.


Cornish emigrant populations can be found throughout the world- not because Cornwall was a particularly oppressive place, but because there's a tradition of mining going back to Celtic times, and therefore if there aren't vacancies in Cornwall or elsewhere in the British Isles, but there are mines elsewhere in the world looking for skilled miners, then it makes sense to emigrate. Which is why you'll find Cornish miners from South Australia to the Eastern seaboard of the United States, from California's Gold Rush to New South Wales.


Cultural, familial and language ties are also another good reason to emigrate, as are natural disasters, such as a potato blight, crop failures and epidemic disease, also overcrowding in cities, or where population growth has outstripped infrastructure, or availability of land, due to different forms of inheritance, or exhaustion of soil fertility, and so on.


If you're going to say something like 'socio-economic prison of Europe' I'd expect it to be backed up with some kind of breakown of immigrant figures to the United States or the political/social situation in whatever European countries you're thinking of.

[GePap]

Originally posted by Velociryx

I choose to look at the economic reality that growing an economy from where both China and India are today and KEEPING them on the right path is no trivial task, filled with pitfalls and uncertainties along the way.

Only history will tell the tale.

This statement is true because the reality is that it's too soon to tell, and certainly NOT "inevitable" no matter how many times you repeat it to yourself.

-=Vel=-

So many words used up purely in the re-statement of a truism.

You could go with some editing.

And yes, I do believe it to be inevitable that China will surpass the US (ditto India), simply because not modernizing and developing is not really and option for the Chinese leadership if they want any pretense of power, or even regime survival. And once left to its devices, an economy as huge as China (with a massive internal market) will make it. And since China will remain vastly bigger than the US for the time being, it needs only to achieve a fraction of the development in a per capita basis to be a bigger economy.

China gets to SK's level, and it already will be a bigger eocnomy. I think it inevitable for China to reach the same development as SK (which had far less to go on when it began in the 1970's), and hence, inevitable its economy will surpass the US. After only 25 years, it is already 6/11 the size of the uS eocnomy, from maybe, MAYBE 1/10 in 1980.

[GePap]

Some examples of the magnitude of the growth:

http://www.asianinfo.org/asianinfo/china/pro-economy.htm

In 1998, the GDP was 7,955.3 billion yuan, an increase of 6.4 times over 1978, at constant prices; the outputs of some major industrial and agricultural products, such as grain, cotton, meat, edible oil, coal, steel, cement, cloth and TV sets, leapt from a backward position to first place in the
world.

http://www.theglobalist.com/DBWeb/StoryId.aspx?StoryId=3765

China is like that. The country has been growing at nearly 10% per year for two decades, doubling in size roughly every eight years. But the Chinese economy was so small and impoverished in 1980 that only lately has it become large enough to attract our attention.

And has it ever! China has relentlessly climbed to become a major exporter and importer. In three or four decades, it may well be the largest economy on Earth. The country is already so large that its foreign exchange reserves are among the world’s largest, as is its current account surplus.

So even if growth slows down, which I think it certainly will, it should remain faster than growth in the US.

[lord of the mark]

Originally posted by molly bloom


Democracy was, after all, an alien concept to the Puritan, Calvinist and Presbyterian settlers of English descent.

from what i know of the 17thc Presbyterian Kirk, id have to say thats not 100% accurate. Not pure Jacksonians perhaps, but the idea of "rule by the many" was hardly a completely alien concept.

[lord of the mark]

Originally posted by GePap


So many words used up purely in the re-statement of a truism.

You could go with some editing.

And yes, I do believe it to be inevitable that China will surpass the US (ditto India), simply because not modernizing and developing is not really and option for the Chinese leadership if they want any pretense of power, or even regime survival. And once left to its devices, an economy as huge as China (with a massive internal market) will make it. And since China will remain vastly bigger than the US for the time being, it needs only to achieve a fraction of the development in a per capita basis to be a bigger economy.

China gets to SK's level, and it already will be a bigger eocnomy. I think it inevitable for China to reach the same development as SK (which had far less to go on when it began in the 1970's), and hence, inevitable its economy will surpass the US. After only 25 years, it is already 6/11 the size of the uS eocnomy, from maybe, MAYBE 1/10 in 1980.

china has 4+ times the population of the US. Given Ricardian dynamics, its hard for any nation that is sufficiently capitalist, open to the world economy, reasonably stable to not steadily rise toward global living standards. At least thats been the experience of nations that have opened up in the last few decades, some hiccups along the way aside. So its certain that China will, barring a reversal of policies, a shattering loss of stability, or a bizarre change in population levels, surpass the US in GDP at SOME point in the future.


But is this not a truism by now? Its Paul Kennedy - its the history of the world the last 500 years or so - the basic "technology" of trade, free markets, rule of law, property rights, etc is steadily applied to larger and larger bases - Venice, to Holland, to England, to the US, and now to China.

[lord of the mark]

Originally posted by GePap
I have not seen much from India either when it comes to energy production- China, at huge environmental costs, is on a damn building spree, and has plans to at some point start opening 2 nuke plants a year for 40 years. The Chinese have also gotten a huge jump on securing commodities. Things are going to be expensive for India since China has driven prices in commodites straight throught the roof.

IIUC India has taken advantage of its proximity to the Persian Gulf to purchase LNG delivered by tanker for gas fired power plants.

[sprucemoose3311]

Interesting news that oughta push this thread back up again

REPORT: CHINA, RUSSIA TO 'REHEARSE INVASION OF TAIWAN'
Thu Mar 17 2005 11:02:09 ET

MOSCOW, March 17. (RIA Novosti)-Yesterday, Chief of the Russian General Staff Yury Baluyevsky left for China to settle a scandal over the first Russian-Chinese military exercise, Commonwealth-2005, which is due to be held this fall off the Yellow Sea coast, writes Kommersant.

The initial plans were to practice operational teamwork in combating terrorism during the exercise. However, Beijing, skillfully changing the format of the exercise, has tried to re-orient the two countries' armies to practicing an invasion of Taiwan.

The choice of where the exercise will take place became a stumbling block. The Russian military selected the Xinjiang-Uigur autonomous region, basing their choice on the area's problematic nature due to Uigur separatists and its proximity to Central Asia, which has become an arena in the fight against international terrorism. However, Beijing flatly rejected the proposal. Instead, it suggested the Zhejiang province near Taiwan.

A joint exercise in this area would look too provocative and trigger a strong reaction not only from Taiwan but also America and Japan, which recently included the island in the zone of their common strategic interests.

Beijing is trying to use Russia as an additional lever of pressure on the disobedient island to show it that its policy is also causing dissatisfaction in Russia, from which the Taiwanese are expecting assistance in their dialogue with Beijing and bid to join the WTO and the UN.

On the Russian military's insistence, the exercise was shifted north to the Shangdong peninsula. However, the Chinese are trying to change the format of the exercise with proposals to enlarge the contingents with Marines and Pacific Fleet warships. Marine landings to seize the area will be practiced during the "antiterrorist" exercise.

Russia's agreement to hold the exercise will inevitably cause a furor in America, Japan and Taiwan. But a refusal will spoil relations with China, which three months ago courteously agreed to Russia's proposal to hold an exercise.

Developing...
filed by Matt Drudge



Interesting... really throws a curveball at what everyone is thinking (and justifies a few people's statements)

[GePap]

Originally posted by lord of the mark
china has 4+ times the population of the US. Given Ricardian dynamics, its hard for any nation that is sufficiently capitalist, open to the world economy, reasonably stable to not steadily rise toward global living standards. At least thats been the experience of nations that have opened up in the last few decades, some hiccups along the way aside. So its certain that China will, barring a reversal of policies, a shattering loss of stability, or a bizarre change in population levels, surpass the US in GDP at SOME point in the future.


But is this not a truism by now? Its Paul Kennedy - its the history of the world the last 500 years or so - the basic "technology" of trade, free markets, rule of law, property rights, etc is steadily applied to larger and larger bases - Venice, to Holland, to England, to the US, and now to China.

From the reaction of Vel, Drakie Pooh and Plato, obviously NOT yet a truism.