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The China house of cards - a 2009 scenario

By Arthur Thomas - posted Monday, 12 January 2009


In a weakened global economy, China may face another problem as millions of Chinese entrepreneurs and workers flee Africa, Latin America, Central Asia, Middle East, and the Pacific to return home to a restless economy and widening unemployment. China's huge army of guest workers in many developed countries will also return as jobs disappear.

The unemployed in Africa claim the Chinese take their jobs. Thousands in once prosperous textile mills lost their jobs to closures as Chinese traders exported local cotton to China for processing, and imported cheap clothing and other goods. Chinese displace local traders. Miners work under slavish conditions for Chinese owners.

Opportunites squandered

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It is a matter of population and flawed planning processes of a centralist government.

Globalisation provided China with the unique opportunity to raise the standard of living and individual wealth for its 1.3 billion people who in turn, would create massive domestic demand. But the rural and urban poor saw little to no benefit for their efforts in producing a decade of record economic growth. Official corruption deprived farmers of their land. Unsustainable demands on China's farmlands created new and expanding deserts, displacing more farmers.

Instead of using the massive revenues to nurture domestic demand and reduce savings, an orgy of mianji (making of face) and self aggrandisement plundered the windfall to create ostentatious edifices to the CCP at both local and federal levels. These were surpassed by the more than US$28 billion on the unnecessary premature grab for the 2008 Beijing Olympics.

An estimated 100 million rapidly grew into a consumer ravenous middle class with high expectations, flaunting their new wealth. It was quick to embrace the opportunities to gain greater wealth from leveraging only to discover stock markets can travel up and down.

The middle class is still only a minority of China's population, but one more willing to embrace debt that the majority. The rural majority however have long memories of starvation and deprivation and the necessity to have cash.

A bonus for global warming

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A recession for the world's major polluter and greenhouse gas emitter will be a major bonus in reducing global warming as all of the heavy coal and energy consumption industries cut back. The environment will benefit from a reduction in across the board emissions and pollution discharge.

A worldwide reduction in emissions will give climate change scientists a unique opportunity to observe the impact of sudden declines in greenhouse gas emissions on global warming and global dimming.

After the crisis - losers and winners

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About the Author

Arthur Thomas is retired. He has extensive experience in the old Soviet, the new Russia, China, Central Asia and South East Asia.

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Creative Commons LicenseThis work is licensed under a Creative Commons License.

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