Comments on: China’s aging workers

By: chinacomment

chinacomment — Mon, 07 Jul 2008 13:51:05 +0000

I agree with your comments about hidden productivity in China’s provinces. China is like two different countries- a rural 3rd world one with low wealth, income, and productivity and a developing urban one with higher productivity.

However, in comment to: “What really somewhat annoys me is all of the economists that have been saying that China saves too much, should consume more, and switch from a capital-intensive system to a labor-intensive system, and that it is unhealthy for China to be saving 40% of GDP”

I believe, and I may be incorrect, that perhaps the main reason for encouragement of personal spending is:

* Internal Investment- to better indigenously develop the country’s industry and resources without relying on the whims of foreign investment and also without being encouraged to invest abroad.

* There are also a couple of other more techincal explanations you can find interspersed in Michael Pettis and Brad Setzer’s comments on this news/blog service: http://www.rgemonitor.com/asia-monitor

One reason China’s savings rate is so high is that they lost a lot of social programs that once could provide for them; also now that they only have one child to support them in their old age- they must prepare themselves better for mostly-unsupported retirement.

http://chinacomment.wordpress.com

By: Anonymous

Anonymous — Sat, 31 Mar 2007 09:10:52 +0000

[China is pumping $200 billion into the US economy each year because China doesn’t have the financial system to handle all of the retiree money, but the United States does. At some point this outflow will become an inflow, both as China develops its financial system so that it can invest the money without a “round trip” into the United States, and as retirees retire.]

you need to take general equilibrium more into account.
the said inflow to outflow scenario is only possible if later down the road
you find other peoples willing to accumulate claims on corporate USA at reasonable prices.

By: Risk and Withdrawing Trillions of Dollars « The Weifang Radish

Risk and Withdrawing Trillions of Dollars « The Weifang Radish — Sat, 24 Mar 2007 01:32:49 +0000

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