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What Happened to Argentina? Can something like that happen to China?

March 29 2005 at 2:08 AM
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Anonymous  (Login SUN888)

 
I watched a documentary on how 40 billion dollars were taken in the middle of the night out of the country by multinational banks. Bank accounts of the people were frozen by the government and half the country became unemployed.

 
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Anonymous
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Re: What Happened to Argentina? Can something like that happen to China?

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March 29 2005, 5:24 PM 

"In two years, the holdings of Argentina's Central Bank dropped from $30 billion to $5 billion, prompting the government to freeze the accounts of Argentine civilians, thus liquidating their life savings. Argentina's unemployed now include lawyers, teachers and doctors.

There has been an increase in fees for Argentine public services, cuts in social programs and reforms that are favorable to foreign
banks. Argentina last month defaulted on its payments to the World Bank.

The World Bank and IMF is implementing similar economic programs in other countries. In Argentina's case, it is particularly
pronounced. The policies are linked to poverty and hunger.

Foreign banks played a major role in the Argentine financial crisis,
they made enormous amounts of money on extremely high interest rates that were charged through most of the last few years. Their lending does not contribute to productive investment or to any economic growth. The country has been in a recession for more than four years. The U.S. government, which runs the IMF, destroyed the Argentine economy. It was once one of the
richest countries in South America. Now more than half the people are living below the poverty line. "

 
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Liang1ahost
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Re: What Happened to Argentina? Can something like that happen to China?

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March 29 2005, 11:06 PM 

The same thing is happening everywhere where exports accounts for a large part of the national economy. From the Philippines to Mexico to Brazil to every country that emphasizes exports, especially subsidized exports through excessively low exchange rate, the national economy inevitably declined as foreign traders get richer and richer.

The only way to enrich the people is the expansion of the internal economy. This should be obvious to anybody. Unfortunately, people have grown up thinking exports is the only way to enrich a country that they irrationally support more exports even at excessively low exchange rate which makes their exports a free gift to the importing countries.

FDI also is just a way for rich countries to buy up backward countries cheaply, especially when the currencies of the backward countries are excessively low. I keep telling the Chinese people the only way to make China strong and rich is to develop China's own domestic economy which has nothing to do with foreign trade. China should do only enough exports to earn enough foreign exchange to buy high tech products that it critically needs and nothing more. China should strive to make yuan a hard international currency. In the end, the only way to make China rich and powerful is to follow my 12-guidelines.

http://www.network54.com/Forum/thread?forumid=371672&messageid=1105667957&lp=1105667957

====================================================

12 guidelines for the rapid development of China’s economy:

1. China’s store of wealth should be in terms of the knowledge base of its people and in the productive facilities and infrastructures that are owned by the Chinese people;

2. Because of the first statement, China should implement specific programs to rapidly increase the education of its people especially in higher science and engineering education; special programs should be implemented to educate some 1 million science and engineering doctorates within 10 years and ultimately educate some 5 million science and engineering doctorates within 30 years. These special education programs should provide full scholarship to any qualifying student, especially those in the rural areas, who do not have the financial means to participate in the special advanced educational program;

3. Also because of the first statement, China should implement wide-ranging science and engineering R&D to advance China’s high tech knowledge so that it may quickly equal and ultimately surpass any foreign countries in terms of high tech products thus minimizing the need for China to import high tech products while at the same time enable Chinese companies to export high tech products of China’s own. Since the high tech products will be made with highly skilled and highly paid scientists and engineers and technicians, it will minimize the need to subsidize exports thus making foreign trade beneficial to China as a whole;

4. To raise the overall economic level of China, the rural farmers must be relocated to the urban areas where they can be put to work more productively in manufacturing and service sectors;

5. Urbanization of the farmers should be understood to be not the building of luxury office towers, luxury hotels, or luxury housings that only “rich” foreign investors with their over valued dollars or heavily subsidized “rich” Chinese exporters can afford. Urbanization should be understood to be putting the farmers to work in the urban settings to build their own housings, manufacture their own consumer goods, and provide their own services. Only when urbanization can be done in a bootstrapping operation will it be self-sustaining and long lasting, unaffected by external forces or conditions such as recession or inflation or political turmoil in foreign countries;

6. With the understanding from the above, it is clear that China’s creation of wealth does not depend on foreign factors. Therefore, China should concentrate on the internal development and minimize the insidious “subsidized” export which is emasculating the Chinese economic development;

7. Specifically China should withdraw immediately from the evil WTO which is nothing more than a dog collar around China’s economic neck and provides the control by means of which the foreigners are taking over China’s economy and turning it into an economic colony. If China lost control of its economy, it will quickly lose control of its political sovereignty and military security as well;

8. Following the withdrawal from the evil WTO, China should ban all foreign direct investments (FDI) and allow foreign access to China’s market through joint ventures (JV) only which are predicated on real transfer of technologies and limited to 10% for the foreign partners. China should make a distinction between FDI which is foreign direct investment made by non-ethnic Chinese of foreign citizenship and OCI which is overseas Chinese investments made by ethnic-Chinese of foreign citizenship. Ethnic Chinese of foreign citizenship are no different from Chinese citizens who have never left China. They will not transfer their capital and accumulated profits overseas but will leave them inside China on a long term basis. Because of this there is no difference between OCI and domestic investments and should be encouraged by the Chinese government;

9. China should trade by negotiating bilateral trade treaties and bilateral investment treaties that will allow China to implement an enlightened protective trade policies that would protect the fledgling high tech and farming industries while they consolidate and open those sectors that are already competitive to foreign competition on genuinely equal competitive rules;

10. China must immediately raise the value of the RMB by some 10% to 20% at a fixed peg, and continue to raise the value of the RMB steadily to full PPP value, while maintaining a fixed peg after each increase, within 7 to 10 years at which time it could allow a wider trading range of some 10%; ultimately when the Chinese economy has reached full development the peg can be removed totally as the Chinese yuan will be the strongest currency in the world backed by an economy that is as big as all the rest of the world’s economy combined;

11. China must immediately implement a fuel cell/hydrogen transportation system to be totally free of oil imports within 10 years. China must also implement a program to build some 1,000 nuclear power plants within 30 years to make China completely energy self-sufficient;

12. While the Chinese government must direct the overall development such as urbanization, education and science and technological R&D, etc., yet it must encourage the development of private enterprises so that eventually all the enterprises in China will be owned by the Chinese people. Only a privately owned economy will be motivated and dynamic to provide the most advanced goods and services.

With the implementation of the above policies, China’s economy will grow rapidly with rapid increases in the knowledge base of the Chinese people and the rapid increases in the productivity of the Chinese workers which will increase their incomes thus enabling them to afford the highest standard of living in the world. And with the largest economy with the most advanced technologies, China will be able to deploy the most powerful military to guarantee that the humiliation of the 19th and 20th centuries at the hands of the barbaric foreign aggressors will never be repeated again. With the traditional benevolence of the Chinese civilization, China will be able to lead the entire world to an unprecedented era of global peace and prosperity the like of which has never been seen before.







=============================================
This article may be re-posted provided attribution of source is given.




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Anonymous
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Re: What Happened to Argentina? Can something like that happen to China?

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March 30 2005, 4:50 AM 

Every developing country needs to export in order to grow. Argentina is a net energy exporter, and the health care is actually quite good. The public health care system is quite strong and the higher education system is free (i.e. you don't have to pay to get a university degree).

 
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Liang1ahost
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Re: What Happened to Argentina? Can something like that happen to China?

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March 30 2005, 11:46 AM 

"Every developing country needs to export in order to grow."

This is not true. Every country that needs to import goods that it cannot produce needs to export in order to pay for the needed imports. This is a big difference from saying that a country needs to export in order to grow. Unfortunately most people cannot understand the difference. If China can produce everything it needs, then it does not need to import anything in order to grow, while a small country like Brunei needs to import just about everything in order to have anything from toothpaste to jumbo jets.

In the case of China, it is very fortunate in having most of everything it needs and could best employ its energy and resources to build up the internal economy. Especially for China subsidized trade is denying resources to the development of the internal trade and is responsible for the very slow internal grow of China. While people are dazzled by signs of rapid growth such as the increase in the purcahse of cars, yet this is only a very small amount compared to China's vast population. In the end, China could and should develop its own internal economy in order to give the Chinese people the fastest rate of rise in standard of living.




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This message has been edited by Liang1ahost on Mar 30, 2005 11:41 AM


 
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Anonymous
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Re: What Happened to Argentina? Can something like that happen to China?

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March 30 2005, 2:49 PM 

In order for a internal economy, people need money to buy things in the first place. Where are they going to get that money from? When they get jobs, they will produce but who will they sell these goods to when people can't afford them?

You talk about Burnei but they export billions of dollars worth of oil each year in order to get the money to buy things.

 
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Liang1ahost
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Re: What Happened to Argentina? Can something like that happen to China?

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March 30 2005, 10:29 PM 

"In order for a internal economy, people need money to buy things in the first place."

Money is in exchange for goods and services produced. Where is it said that money can be eraned only by exporting goods? It is a failure of the Chinese policy that the Chinese people can only work for the lowest wages to produce goods for exports. If the Chinese government followed my 12-guidelines then hundreds of millions of jobs will be created while expanding the Chinese interal economy. While the export jobs must be of the lowest wages to compete against other low wage exporting countries, jobs for internal economy can be raised to the highest level commensurate with the productivity.

It is the stupidest thing to ask where people's money is coming from. The money is nothing more than a medium in exchange for output. The more important question is to ask where the jobs are coming from and what kind of jobs? If the Chinese government start expanding the Chinese economy by putting unemployed or underemployed farmers to more productive work in the urban areas, then immediately there will be tens of millions of new jobs every year with increasing productivity for the building of housings, building of schools and hospitals, building of infrastructures, productivion of goods and services of all kinds, etc. And the increase in demand will in turn create more demand which leads to more jobs. So this answers the question of where the jobs are coming from and what kind of jobs they will be. Therefore, the development of the internal economy is in itself the creator of jobs. And more money will come with more jobs of higher productivity.

"Where are they going to get that money from? When they get jobs, they will produce but who will they sell these goods to when people can't afford them?"

They will sell what they produce to each other. Furthermore, their productivity will increase so that they produce more for each other. The bakers will produce more bread. The textile workers will produce more shirts and pants. All kinds of consumer goods will be produced for more people. Their increased output will give them more incomes. And the increased incomes means more purchasing power. This means more people who are able to afford more goods of higher prices.

You are asking which comes first? The chicken or the egg? The answer is that they come at the same time. The Chinese government must at the same time increase output and consumption. And the urbanization of the farmers will provide both at the same time - both supply and demand.

Of course, the initial investment must come from the Chinese government. But once started the development will be a self-sustaining growth. This is why the urbanization of the farmers is so important.

"You talk about Burnei but they export billions of dollars worth of oil each year in order to get the money to buy things."

Brunei is just an example to show that small countries must import everything. The fact that it has a lot of oil is beside the point. I could also mention Laos or Nepal which have much less. Since they are small and don't have much technologies at all, they must either export whatever they can or live a very low tech life.

China on the other hand could and should advance its own highest level technologies and shouldn't need to import much high tech products. In which case it would not need to export much of anything to pay for the reduced imports and could still give the Chinese people the highest standard of living based on the most advanced technologies in the world. The fact that China is fixated on foreign trade and not on the advancement of technologies and the expansion of the internal economy is a very bad mistake.


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Anonymous
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Re: What Happened to Argentina? Can something like that happen to China?

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March 31 2005, 5:11 PM 

"It is the stupidest thing to ask where people's money is coming from. The money is nothing more than a medium in exchange for output."

I understand that money is nothing but printed paper but the value of the Yuan can become worthless. I don't think the government can just create tons of jobs and print more money to pay them.

China still needs to import tons of raw materials like steel, oil, cement, wood and even food.

The Rothschilds AKA IMF AKA World Bank pretty much control the worlds currency. They are all the same people and they will never allow such a thing.

How International Bankers Gained Control of America

Rothschild family

 
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Liang1ahost
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Re: What Happened to Argentina? Can something like that happen to China?

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April 2 2005, 6:39 PM 

"I understand that money is nothing but printed paper but the value of the Yuan can become worthless. I don't think the government can just create tons of jobs and print more money to pay them."

Actually any government can print any amount of money and create any number of jobs. The problem is keeping the demand and supply balanced. That is there must be an increase in supply as the amount of money increased. As long as the demand and supply are balanced there will be a rapid growth resulting in an expansion of the economy and the rise of standard of living.

The danger is if the supply cannot increase with the rise in money then you will have a situation of more money chasing fewer godds which leads to inflation which in severe cases will end in the collapse of the currency. But China's problem is not too much demand. In fact China's problem is too little demand from a "poor" Chinese consumer group. So if the amount of money increased it will increase the demand to buy up all the goods that are currently exported.

Furthermore, if the money injected into the economy is used to employ workers to produce things that are needed such as more electricity, more water, more schools and hospitals, more consumer goods of all kinds, and infrastructures, etc., then there will be a healthy growth of demand and supply leading to a rapid and balanced growth of the Chinese economy.

"China still needs to import tons of raw materials like steel, oil, cement, wood and even food."

Obviously China still needs to import many things such as jumbo jets, parts and components for all kinds of consumer electronics, technologies for cars, etc. However, China is importing only specialty steel which forms only a small fraction of the steel needed by China. As China's technologies advanced it should be able to produce all kinds of specialty steel and should not need to import any kind of steel at all. I doubt very much if any kind of cement is currently imported. Please correct me if I were wrong on this.

Lumber is obviously very scarce now in China and will probably grow scarcer as demand increased. China should expand its aforestation efforts to increase the supply of lumber in the years to come. Aforestation will also help suppress desertification and conserve soil and water. Unfortunately, it may be necessary to import lumber. But with more advanced technologies, many uses for lumber can be replaced by other kinds of materials such as stone, plastics, pressed boards, glass fibers, etc. So again it is of critical importance for China to advance its technologies.

China will not be able to produce tropical fruits such as cocoa or oil palms and must import them. This is unavoidable.

As to oil, I've always said China must immediately expand its R&D on fuel cell and build 1,000 nuclear power plants in the next 30 years to provide the needed electricity to electrolyze water to make hydrogen to power the fuel cell cars. Once China succeeds to change over to fuel cell cars, then oil need not be imported or need be imported only in small quantities. Here too we see again the importance of advancing China's technologies.

It is for these reasons why I put the advancement of China's technologies as the first priority in my 12-guidelines.

"The Rothschilds AKA IMF AKA World Bank pretty much control the worlds currency. They are all the same people and they will never allow such a thing."

As long as China played by their rules such as the evil WTO, then it will become more and more dominated by them as time goes on. On the other hand, if China concentrated on expanding its domestic economy and advancing its high technologies, then it could turn around and control the world economy. And with its dominance of the world economy it could brush aside these IMF, World Bank, Rothschields, etc. In fact China could dominate them when they have to play by China's rules. This is why I kept saying China should get out of the evil WTO and form bilateral trading treaties such as the ones with the SE Asian countries or the Shanghai Cooperative Group with the Central Asian countries and Russia.

================================================
I'd like to say something more about answering the statement that China's people are too poor to afford its own products which makes it necessary for China to export them.

As I've explained in the previous post, the main reason why China's people are poor is because they are not productive. It is obvious that the American workers are more productive than the Chinese workers by many times. This is the main reason why the Americans are making higher incomes.

But there is also another important reason why the Chinese people cannot afford their own products. The reason is the excessive devaluation of the yuan. Let me give you an example to illustrate this.

Suppose a DVD player costs 830 yuans in China and $100 in America. Since a Chinese farmer makes only some 3,000 yuans a year, he is too poor to afford a 830 yuan DVD player. On the other hand an American makes some $30,000 in annual income and can easily afford $100 for a DVD player. So people say the Chinese are too poor and the Americans are rich.

But now let's say the Chinese government raised the value of the yuan to its full PPP value of 1.6 yuans to the dollar. Now either of two things must happen. First the yuan cost stays at 830 yuans and the dollar cost is raised to $500. Immediately, American consumers will be much less able to afford the $500 DVD player. So the American consumers have suddenly become poorer. The second thing that could happen is that the dollar cost stays at $100 and the yuan cost is lowered to 160 yuans. Immediately many more Chinese can afford to buy the DVD players. So the Chinese have suddenly become much richer. So it is obvious from this example the so-called poverty of the Chinese people is actually forced on them by the CCP policy of excessively devaluing the Chinese yuan. And while it is true the Chinese people are poorer in the absolute sense due to their lesses productivity, yet the Chinese people's poverty is very much aggravated by the CCP policy of excessively lowering the value of the yuan. This is why I kept saying that subsidized exports is impoverishing the Chinese people and is responsible for China's inability to expand its internal economy. This is also the point of my post titled "Subsidized exporters are parasites" which explains why subsidized exporters are parasites sucking away the goods and services produced by the rest of the Chinese economy while returning little or nothing to them. You can see the post at the following link:

http://www.network54.com/Forum/thread?forumid=238054&messageid=1105667800&lp=1105667800

In the end people must realize that trying to use subsidized exports to expand China's economy is like drinking poison to slake the thirst. It will not enrich the Chinese people as a whole but only enriches a small group of exporters. And as pointed out in "Subsidized exporters are parasites" it is impossible for all the Chinese workers to work in the subsidized exports because then there will be nobody left to subsidize them. It is like for a man to try to eat himself. It is impossible.

I hope I have made it clear that the current stumbling block to China's economic expansion are the wrong policies implemented by the CCP. They are wrong to rely on subsidized exports as the main engine of China's economic growth which have reached a point where it is suppressing China's internal growth. The only sustainable way for China to expand and grow is by the advancement of its technologies and by expanding the Chinese internal economy through the urbanization of the farmers. Money is meaningless at the national level. It is as stupid for China to be too cautious about injecting money to stimulate the internal economy as it was stupid for the American Fed to withhold liquidity from the banks suffering runs prior to the depression which made the Great American Depression inevitable.



====================================





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Anonymous
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Re: What Happened to Argentina? Can something like that happen to China?

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April 3 2005, 8:31 AM 

"But now let's say the Chinese government raised the value of the yuan to its full PPP value of 1.6 yuans to the dollar. Now either of two things must happen. First the yuan cost stays at 830 yuans and the dollar cost is raised to $500. Immediately, American consumers will be much less able to afford the $500 DVD player. So the American consumers have suddenly become poorer. The second thing that could happen is that the dollar cost stays at $100 and the yuan cost is lowered to 160 yuans. Immediately many more Chinese can afford to buy the DVD players. So the Chinese have suddenly become much richer."

That is exactly what Argentina did and it ended up to be a very bad idea. Argentina pegged the Peso to the USD 1:1 and it worked well for a short amount of time but investors started shutting down the factorys and setup factorys in places like China cause they can find much cheaper labour.

Right now a majority of the factorys in China are owned by foreign investors. If they see that profits are no longer as good, they can easily move everything to India or anywhere with lot's of cheap labour. There will be thousands of empty factorys and jobless people just like Argentina.

I understand that you want to move away from depending on exports as the main source of income for China but it's still too early. It took America 200 years before it got to the super power that it is now. Maybe China can do it 50-100 years from now.

 
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Anonymous
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Re: What Happened to Argentina? Can something like that happen to China?

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April 3 2005, 8:34 AM 

"In the end people must realize that trying to use subsidized exports to expand China's economy is like drinking poison to slake the thirst. It will not enrich the Chinese people as a whole but only enriches a small group of exporters. And as pointed out in "Subsidized exporters are parasites" it is impossible for all the Chinese workers to work in the subsidized exports because then there will be nobody left to subsidize them. It is like for a man to try to eat himself. It is impossible.

I hope I have made it clear that the current stumbling block to China's economic expansion are the wrong policies implemented by the CCP. They are wrong to rely on subsidized exports as the main engine of China's economic growth which have reached a point where it is suppressing China's internal growth. The only sustainable way for China to expand and grow is by the advancement of its technologies and by expanding the Chinese internal economy through the urbanization of the farmers. Money is meaningless at the national level. It is as stupid for China to be too cautious about injecting money to stimulate the internal economy as it was stupid for the American Fed to withhold liquidity from the banks suffering runs prior to the depression which made the Great American Depression inevitable."

I think their plan is to squeeze foreign competitors until they are bankrupt. Factorys around the world are shutting down cause they can't compete with Chinese factorys. I don't think this will last very long..............

 
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Liang1ahost
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Re: What Happened to Argentina? Can something like that happen to China?

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April 3 2005, 8:13 PM 

"That is exactly what Argentina did and it ended up to be a very bad idea. Argentina pegged the Peso to the USD 1:1 and it worked well for a short amount of time but investors started shutting down the factorys and setup factorys in places like China cause they can find much cheaper labour."

In a recent post titled "Multi-tier exchange rate for China" at the following link, I had warned that China must not raise its RMB to the full PPP value in a single step but must raise it steadily over a number of years. The reasons are several. One of the main reasons is to give the Chinese manufacturers time to shift their market from overseas to the domestic market. As China's own domestic market increased steadily from a number of factors such as the urbanization of the farmers, the Chinese consumers will be able to absorb most if not all of the outputs of the Chinese manufacturers. Furthermore, as the Chinese manufacturers expand their output they will hire more workers. Therefore, even if the foreign investors relocate their factories to some other countries, the Chinese workers will have no problem finding new jobs with the domestic manufactorers.

http://www.network54.com/Forum/thread?forumid=238054&messageid=1111367876&lp=1111367876

Your main point is that in Argentina foreign investors shut down their factories which led to large scale unemployment of the Argentine workers. The big difference between Argentina and China is that Argentina has no domestic market to expand to fall back on whereas China's domestic market is practically non-existent and could be expanded many times for the next 30 years growing at some 7% per year or more. Because of this big difference you cannot take the lesson of Argentina and blindly apply it to China.

Furthermore, the lesson you should have learned from the Argentina collapse is that over-dependence on foreign investors will inevitably allow the foreigners to control a country's domestic economy which will lead to a situtation where the host country will be turned into a de facto colony which must obey the dictates of the foreign investors. I hope you will not think this is a good position for China to be in. For myself that would be intolerable and I am sure all patriotic Chinese like Wang Xiaodong and the new and proud younger generation of Chinese people will also find that intolerable.

"Right now a majority of the factorys in China are owned by foreign investors. If they see that profits are no longer as good, they can easily move everything to India or anywhere with lot's of cheap labour. There will be thousands of empty factorys and jobless people just like Argentina."

As I've explained above, China is already in a perilous postion from the many years of increasing reliance on foreign investors to provide new jobs to the Chinese workers. If China does not begin expanding its own domestic market, then the only jobs for the Chinese workers are jobs with foreign investors. This is especially unacceptable as there are over 1 billion Chinese consumers who are denied a higher standard of living as they are jobless. This is a huge labor pool going to waste while they live in squalor and abject poverty.

And as I said many times not all the entire 1 billion Chinese workers can work for foreign investors for 2 reasons. The first is that the Chinese workers for foreign investors are being subsidized by the rest of the country. And if all of the Chinese workers work for foreigne investors then there will be no other workers to subsidize them. And they will not be able to maintain their current relatively higher standard of living than the rest of the Chinese workers who are suffering from a lower standard of living because they have to give away part of their output subsidizing those who work for foreign investors.

And as you said, maybe without realizint it, the jobs are the lowest type of jobs in the world. No Chinese could get rich by working for foreign investors. Furthermore, the reason why the Chinese workers working for foriegn investors can make higher salaries than the other Chinese workers is entirely due to the subsidies given to the foreign factory workers by the rest of the Chinese people.

If you think about it for a little moment you will see why the Chinese workers for foreign investors must be getting subsidies from the rest of the Chinese people. If you can't understand then I'll explain it to you. First you must realize that the Indian workers have lower standard of living than the Chinese workers as a national average and the Indian workers are paid even lower salaries than the Chinese workers as a national average. But the salaries for workers of foreign investors in terms of dollars for the two countries are more or less the same. But since China has the higher standard of living the extra amount of standard of living must be subsidized to the Chinese workers for the foreign investors by the rest of the Chinese people. And this is done through the lower rate of exchange of the RMB.

The second reason why foreign investors have not gone to India is that the infrastructure of China is much superior to India. But who paid for these infrastructure? It is not the foreign investors but the entire Chinese people. So here is another subsidy to the foreign investors from the Chinese people which made investment in China so profitable. And again this is done partly through the excessively low rate of the RMB which made all the cost of infrastructure so much cheaper and cost effective than even lower income countries such as India. For instance, the price of water, electricity, freight rates, hotels, cost of telecommunication, etc. are all cheaper due to the low value of the RMB.

For these reasons it is very profitable for foreign investors to invest in China and not in India where average incomes are even lower than that of China. But what is good for foreign investors is bad for the Chinese people. Which is why the current economic regime must be changed.

"I understand that you want to move away from depending on exports as the main source of income for China but it's still too early. It took America 200 years before it got to the super power that it is now. Maybe China can do it 50-100 years from now."

Why do you say it is too early? Maybe you think exports is making China rich thus enabling it to implement such projects as urbanization. But this is not true. Subsidized exports is actually making China poorer. As I've explained repeatedly, urbanization should proceed without regard to money as any amount of money invested in the urbanization project will return great benefits to the farmers as individuals and to China as a nation which will have a vastly expanded economy that is not dependent on foreign investment to any degree.

And as I've explained many times, subsidized exports is not making China richer but making it poorer. This is why the domestic market has been stagnant for many years even as exports expanded some 35% a year for many years so that now foreign trade is more than $1 trillion. If foreign trade is so good for China why is it the Chinese people are not visibly benefiting from this big boom? Obviously exports has nothing to do with raising the standard of living of the Chinese people, 70% of whom are farmers. Also the urban poors are still in the hundreds of millions and these too are not benefiting from the export boom. And even though cars sales is up, yet how many Chinese can afford cars?

And China is using 25% and 30% of the world's aluminum and steel to generate only less than 4% of the world's GDP. China's population is 20% of the world's population. So just to make China's GDP equal to its population China must increase its GDP 5 times and its consumption of all resources 5 times. Do you think China could increase its consumption of aluminum and steel to 125% and 150% of the world's consumption? Even if it could, it is obviously very wasteful and unsustainable. Therefore, for this and many other reasons China must immediately shift from subsidized exports to internal development through the urbanization of the farmers.

It is very disappointing for me to see so many people who are so unable to understand even simple logic. But I hope the newer generation of Chinese people are better educated, with more self-esteem and self-confidence and will see the falacy of relying on foreigners and move boldly, and confidently but with meticulous planning to a new economic regime that will ultimately lead to a more glorious China.
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Liang1ahost
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Re: What Happened to Argentina? Can something like that happen to China?

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April 3 2005, 8:18 PM 

"What Happened to Argentina? Can something like that happen to China?"

You asked what happened to Argentina. But you never gave your own explanation of what happened to Argentina and why. You also have not explained the significance of the Argentina lesson to China. So why don't you tell us what happened to Argentina? Why? And what kind of lesson China should learn from this episode?

Are you trying to intimidate the Chinese people like myself into not rocking the boat, because like you said the foreign investors could get angry and move their factories to India?


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Anonymous
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Re: What Happened to Argentina? Can something like that happen to China?

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April 5 2005, 12:33 AM 

"You asked what happened to Argentina. But you never gave your own explanation of what happened to Argentina and why. You also have not explained the significance of the Argentina lesson to China. So why don't you tell us what happened to Argentina? Why?

I have already tried to explain what I have found from some reading on the internet.

1) Wages of workers became too high
2) The value of the peso became 1:1 with USD
3) Investors were not happy with profits and began closing factories
4) Government and the people were spending
5) Government couldn't pay back loans and had to default
6) Government started printing tons of money and current dropped 3:1 USD
7) Hyper inflation

"And what kind of lesson China should learn from this episode?"

China is still a developing country and should study what Argentina did wrong.

"Are you trying to intimidate the Chinese people like myself into not rocking the boat, because like you said the foreign investors could get angry and move their factories to India?"

I am Chinese myself so I do I certainly don't want to see any factories move offshore. I also think China should be more tough on the rampant Bank fraud that is going on in China.

 
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Liang1ahost
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Re: What Happened to Argentina? Can something like that happen to China?

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April 7 2005, 7:42 PM 

Liang:
"You asked what happened to Argentina. But you never gave your own explanation of what happened to Argentina and why. You also have not explained the significance of the Argentina lesson to China. So why don't you tell us what happened to Argentina? Why?
===============================

Sun:
I have already tried to explain what I have found from some reading on the internet.

1) Wages of workers became too high
2) The value of the peso became 1:1 with USD
3) Investors were not happy with profits and began closing factories
4) Government and the people were spending
5) Government couldn't pay back loans and had to default
6) Government started printing tons of money and current dropped 3:1 USD
7) Hyper inflation
========================================

Liang:
I've explained that inflation is caused by the imbalance between supply and demand. If the increase in wages were balanced by increase in supply of goods and services then there would be no inflation.

Furthermore, Argentina is a small country with little domestic high technologies and must import most of its high tech products. This forces Argentina to balance its trade while keeping its exports high in order to pay for the imports. Therefore, if the peso rose in value then imports become cheaper while exports become too expensive. This in turn resulted in a decline of exports while the dollar reserve is rapidly depleted due to the increased imports. From this it should be understood that the root of Argentina's problem is its lack of domestic high tech products.

The lesson to be learned here is not that China should slavishly keep its currency low so that exports can continue high while keeping the imports low to build up an increasingly bigger forex reserve. The lesson to be learned here is that China should advance its high tech level to the highest level in the world as soon as possible so that it does not need to import any high tech products while at the same time it can export its most advanced high tech products to pay for whatever it could not produce such as platinum or tropical fruits.

While the scenario you drew is relevant to small countries such as Argentina, it is not applicable to the largest country in the world that is China. To apply the lesson of Argentina to China is like giving heart failure medicines to an under-nourished man.

What Argentina should have done is by first expanding its universities to nourture as many genius level students as possible. Secondly it must allocate funding for R&D to produce as much of technological products as it can to minimize the need to import. It should replace as much of imported products with domestic substitutes. Having reduced the need to import to the minimum, then it can expand its exports to pay for what it must import. But since Argentina could not hope to produce all the high tech products it needs, it is doomed to keep its exports high to import the many high tech products that it must import.

There is no reason why domestic consumption cannot be raised to very high levels by expanding domestic productions of goods and services. Consumption is constrained only in imported goods. Also small countries should form manufacturing and trading blocks with other small countries and eventually become a single manufacturing and trading entity such as the EU. For example, the EU member countries could not individually develop a jumbo jet. But by forming a consortium, the EU collectively have developed the Airbus which can then eliminate the need to import American Boeing jets while allowing the EU to export its Airbuses.

Given the above, Argentina should form a regional union with Brazil and Chile and other neighboring countries, politics allowing. With such an union, it would have the natural resources and the human resources to develop most of the high tech products it needs while sharing their resources. Such a union would have no problem to produce all the steel, aluminum, energy in terms of nuclear power, fuel cell cars, supercomputers, etc. An union of several of these neighboring countries will add up to a total population of some 300 million or more with all the natural resources they need. Also out of the 300 million population some 500,000 world class scientists could be educated to develop all the high tech needed.

However, if Argentina continued on its present course, then it must be resigned to a reduced level of standard of living while trying to minimize imports by supplying as much as it can all the things needed by domestic products.
-----------------------------
Liang:
"And what kind of lesson China should learn from this episode?"

Sun:
China is still a developing country and should study what Argentina did wrong.

Liang:
China is a developing country which is painfully obvious. The fact that it is still a developing country after 55 years of CCP rule is a condemnation of the CCP min-rule. But the relevance here is how should China pull itself out of the developing country status into the developed country status. And the way for China to pull itself up to the developed country status is by advancing its high technologies. This is why I've said repeatedly that the first essential task for China is to advance its high technologies. And the way to do this is by educating its geneius level students to the highest doctorate level and then provide them with at least 3% of China's GDP to do the R&D.

And as I said above, Argentina's problem is not having enough domestically produced high tech products which forces it to import practically every high tech products it needs thus compelling it to maintain a low exchange rate to increase exports while discouraging imports. But I repeat again, whiel Argentina could not hope to produce all the high tech products it needs, China has all the potential to produce the best high tech products in the world. You cannot begin to talk about China and Argentina unless you first understood this critical difference. This is why what China should do and what Argentina should do are two diametrically opposite things.
------------------------------------------------

Liang:
"Are you trying to intimidate the Chinese people like myself into not rocking the boat, because like you said the foreign investors could get angry and move their factories to India?"

Sun:
I am Chinese myself so I do I certainly don't want to see any factories move offshore. I also think China should be more tough on the rampant Bank fraud that is going on in China.

Liang:
I like to think you have the best of China and the Chinese people at heart. But you must also understand that you cannot apply what is good for smaller countries to China. As I explained above what are good for

Argentina are:

1. increase its scientists;
2. increase production of domestic high tech products as much as possible; also substitute domestic products for imported products as much as possible;
3. minimize imports to reduce exports;
4. expand domestic production of goods and services such as education and medical services and entertainment and cultural activities which are not constrained by imports.

What are good for China are identical to Argentina except where Argentina could not hope to produce all the most advanced high tech products, China can. The reason is China has millions of genius level students who can be educated to become millions of world class scientists to develop all the most advanced high technologies in the world. Also China has vast stores of natural resources. This is the crucial difference that will allow China to expand its high tech products to be entirely domestically self-sufficient for high tech products. It will also allow China to export high tech products at a very favorable price that will allow the yuan to be valued at the highest PPP rate while giving the Chinese workers the highest incomes in the world. China's high tech will also allow China to substitute what it could not produce such as substituting hydrogen for oil which will reduce the need to import to the barest minimum which in turn reduces China's need to export to a minimum.

Therefore, what China should do is expand its domestic economy on the back of the high tech advancement. This is the urbanization of the farmers which will expand both the demand and supply at the same time to eliminate the danger of inflation as has happened in Argentina. Argentina's technological level has plateaued but the Argentinians want higher standard of living. So they simply printed more money and imported more goods without expanding domestic supplies which ievitably led to inflation and monetary collapse. Therefore, China should expand domestic supplies by putting the urbanized farmers to produce more to satisfy their own needs to achieve a balanced supply and demand structure which leads steadily and rapidly to a greatly expanded and prosperous economy.

China is very fortunate to have so many advantages. It would be very stupid for China to give up this advantage and foolishly keep to expanding its low tech, low labor cost exports which is keeping the Chinese high tech development slow which suppressing the most urgently needed development of the urbanization of the farmers. And the last thing China should do is to learn the wrong lesson from Argentina's problems.

In the final analysis what both China and Argentina should do is to nurture as many world class scientists and possible and produce as much high tech products domestically as possible while minimizing the need to import. But being a small country Argentina could not hope to produce all the high tech products it needs. Therefore, Argentina is doomed to keep its currency value low to discourage imports while encouraging exports. Its store of value must of necessity be in the forex reserve which is the only thing that will allow it to get the high tech products. China on the other hand can easily produce all the high tech products it needs and could also export these high tech products to pay for its imports. Therefore, China should advance its high tech by increasing the number of its world class scientists and increasing the funding for R&D while at the same time to expand the urbanization of the farmers to raise the level of the standard of living of all the Chinese people. China has all the natural resources to accomplish this task. And with the most advanced high tech products in the world and the biggest economy in the world, China could demand that the rest of the world uses the yuan as the medium for international trade thus eliminating its need to accululate a large forex reserve. So what China should do is decrase FDI and reduce forex reserve while advancing its education and scientific R&D while implementing the urbanization of the farmers.Forum host.

 
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myfriend01
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Can something like that happen to China?

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April 9 2005, 9:25 PM 

It is interesting to note that one of the policy making neocons in Warshington has been named chairman of the IMF. This person is behind the invasion of Iraq, a neocon hawk. Do you think Bush purposely lose a neocon warmonger (who is closely associated with him) to a non-military IMF? I think that on the contrary, Bush appointed him to the IMF where he could use the power of money to further the neocons' global objectives. What Warshington militarily cannot accomplish worldwide, it could use the IMF to accomplish.

If the IMF destroyed Argentina from an independent and self-sufficient state to what is now plaged by poverty and humiliation, the IMF under the chairmanship of this neocon can do more harm to more countries.

Yes, what happened to Argentina can happen to many other countries, including China. The old China was dominated by foreign banks and companies; this is proof that it can happen again. Fortunately the current Chinese leadership is a good one, not the same as the rampantly corrupt KMT that flattened China to ground zero in just about everything. A corrupt government invites robbers and thieves of all kinds. The current leadership is resistant to foreign domination, and with my confidence in the current leadership, I would say that the IMF and others wouldn't be able to succeed in dominating and/or controlling China. Amen.

 
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Diunei Lingyen
(Login Diunei)

Re: Can something like that happen to China?

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April 11 2005, 7:26 AM 

Then again, if China continues to follow IMF doctrines to the letter then that is bad news for the Chinese economy.  Paul Wolfowitz being named as the head of an "international" organisation if further proof that Western-dominated globalisation is perilous for those that do not collaborate with white countries.  While I can understand the Chinese government wanting to shut down businesses in the West by undercutting them, at the same time there are disturbing news articles everyday about how white/Western firms are salivating at the idea to buying up everything from ad firms to banks to mobile phone companies in China.

 
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Liang1ahost
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Open Group

Re: Can something like that happen to China?

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April 11 2005, 6:05 PM 

"It is interesting to note that one of the policy making neocons in Warshington has been named chairman of the IMF. This person is behind the invasion of Iraq, a neocon hawk. Do you think Bush purposely lose a neocon warmonger (who is closely associated with him) to a non-military IMF? I think that on the contrary, Bush appointed him to the IMF where he could use the power of money to further the neocons' global objectives. What Warshington militarily cannot accomplish worldwide, it could use the IMF to accomplish."

If America's objective is to help all countries in the world to a high level of democracy, then it is a noble objective and I would support it whole-heartedly. But democratization of the world is nothing more than a convenient cover for America to "conquer" the world and plunder it for the benefit of the few American mult-billionairs. America itself is not a true democracy. It is a racist stratified country where non-whites are denied equal rights and opportunities. And even while the laws may say all should be equal, the reality is discrimination from the higher cost of insurance to subtle discrimination of not promoting the minorities. And even if there are some charges of reverse discrimination, the reality is that the monorities are still discriminated against. The minorities are held to higher standards. The minorities are given less medical services. The minorities are punished much more harshly that the whites as witnessed by the much higher proportion of minorities on the death row many of whom have been proven innocent by DNA tests. In short the minorities still do not get the same equal opportunities nor are they protected as much as the whites.

"If the IMF destroyed Argentina from an independent and self-sufficient state to what is now plaged by poverty and humiliation, the IMF under the chairmanship of this neocon can do more harm to more countries."

Actually, Argentina is not the first or the only case. Earlier in this forum, a reference was made to one of Henry CK Liu's article in Asiatime called "Tequila Trap Beckons China." The article explained how Mexico's economy and foreign reserve was disrupted by its excessive reliance on FDI and foreign trade and manipulated through the currency derivatives such as futures and options and a free-floating peso. Those interested in reading the article can go to the following link:

http://www.atimes.com/atimes/China/FK06Ad01.html

Liu's advice to China was not to free float the RMB, to make the RMB a hard international currency, to decrease exports, and concentrate on internal development. All of these agree with my own guidelines for China's development. The only point of disagreement is where Liu said the RMB should not be raised while I think it should be raised but remained pegged until it has reached the full PPP value and allowed to free-float only when China's economy has become the largest in the world and the RMB has become as desirable as, if not more desirable than, the dollar. Another point of disagreement is where Liu would rely on government projects to expand the Chinese economy while I believe China could expand faster by allowing more private enterprises. However, to the extent that urbanization and many other projects such as cleaning up the environment and building of universities and R&D must have the backing and funding of the Chinese government, I do agree with Liu that government projects are cirtical to guide China's growth. But ultimately, large private enterprises must be encouraged to provide all the goods and services that Chinese consumers need and want.

"Yes, what happened to Argentina can happen to many other countries, including China."

As I commented above already, what happened to Argentina has happened to Mexico and Brazil and many other Latin American countries. It could also certainly happen to China if China were so foolish as to rely on foreign trade while "obeying" the evil WTO to allow unrestricted FDI and foreign trade. I have always said the IMF, World Bank, and the WTO are one and the same. They are all devices of America to subjugate the world impoverishing them for the benefits of a few rich American white men while the American society itself becomes more stratified and racist.

It is unfortunate that while people are willing to believe that the IMF and World Bank are only interested in advancing the imperialistic self-interest of the Americans, they are at the same time unwilling to believe the evilness of the WTO which is ultimately the device that forces open the domestic economies of the developing countries to wholesale domination of the developed countries through unrestricted trade and unrestricted FDI.

"The old China was dominated by foreign banks and companies; this is proof that it can happen again. Fortunately the current Chinese leadership is a good one, not the same as the rampantly corrupt KMT that flattened China to ground zero in just about everything. A corrupt government invites robbers and thieves of all kinds. The current leadership is resistant to foreign domination, and with my confidence in the current leadership, I would say that the IMF and others wouldn't be able to succeed in dominating and/or controlling China. Amen."

It is naive to put so much faith in the current CCP leadership. It is a sign of the lack of understanding of the economic problems facing China that the current CCP leadership is continuing to emphasize foreign trade while only giving little more than token efforts to develop the internal economy through the urbanization of the farmers. It is also a sign of the lack of understanding that the CCP leadership had put on the dog collar of the evil WTO itself and have continuously promised to "obey" the rules of the evil WTO. This is tentamount to giving up China's economic sovereignty. It is also a sign of the CCP foolishness that the reverse racists have become so numerous and dominant in the Chinese government and society.

In the final analysis, China can avoid being turned into en economic colony only by reducing its foreign trade and expanding its own internal development. Only by advancing its own high technologies to the highest level in the world, can China be truly independent. And as long as China tried to play the Americans' game by Americans' rule through the IMF, World Bank, and the WTO, then it is inevitable that China will be turned into an economic colony forever turning out cheap exports made by low cost labor to support Americans' high standard of living. In the end China must rely not on God but on the vast potentials of the Chinese people. And the best way to unleash China's potential is by implementing my 12-guidelines.



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Liang1ahost
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Re: Can something like that happen to China?

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April 11 2005, 6:40 PM 

"Then again, if China continues to follow IMF doctrines to the letter then that is bad news for the Chinese economy. Paul Wolfowitz being named as the head of an "international" organisation if further proof that Western-dominated globalisation is perilous for those that do not collaborate with white countries."

Many backward countries have looked to America to lift them out of poverty and up to a standard of living as high as that enjoyed by the Americans. But they have all become disappointed. The Phillipines was America's closest ally since the time after the Spanish-American War when America took over the Philippines as a colony. But today despite all the American brand of democracy and free enterprise, the Philippines is one of SE Asia's poorest countries. It is obvious that a close assoication with America has not benefited the Philippines. It is more likely that America has sucked it dry economically and left it to rot.

As I said before, as an American I would be proud of America if it had truly benefitted the backward countries of the world. But America simply has no intention of benefitting the world. It is much more interested in subjugating the world and plunder it for the benefit of a few rich white men while turning America itself into an even more racist society where disagreement with the neo-con philosophy is branded as treason to the American ideal. But the neo-con philosophy itself is the biggest traitor to the American ideal of equality and freedom.

And the biggest disappointment to myself is this wholly hostile and unnecessary antagonism against China. Not just the CCP which I think is very bad for China, but China itself. America simply does not want to China strong and rich. And all the talks about human rights and democracy are just so much cover to attack and suppress China under whateve form of government.

"While I can understand the Chinese government wanting to shut down businesses in the West by undercutting them,..."

As I have explained many times, it is not realistic to think that China could shut down and destroy America's ability to produce manufactured goods. The American factories in China are still owned by the Americans who operate the factores by retaining the management at the highest level and reaping all the profits from the output of those factories and the intellectual property rights. In order to truly destroy America's ability to produce anything, China must own the factories, own the intellectual property rights, retain all the management at the highest level, and reap all the profits of the output. In which case, once China refused to sell these products to the Americans, then the Americans are up the proverbial creek without a paddle. Since the Americans don't own the factories, they cannot move it to some other countries. And since they don't own the intellectual property rights, even if they could move the factories to some other countries, they could not produce the goods without infringing the intellectual property rights. And since they have lost the high level management, they won't even know how to management their factories in any event. But as it is, since the Americans own both the factories and the intellectual property rights and retain the managment, they can simply move their factories to some other countries and start over again very quickly. So in the end, it is naive to think that China could destroy America's ability to manufacture anything by providing cheap labor and cheap resources while not developing any high technologies itself.

"... at the same time there are disturbing news articles everyday about how white/Western firms are salivating at the idea to buying up everything from ad firms to banks to mobile phone companies in China."

The foreign countries are obviously hoping to buy up all China's assets and own all of China's economy. This is why the evil WTO is so important to them. Through the evil WTO, they are now free to buy up anything they want. China has already lost half of its auto market to foreign car companies. If the evil WTO rules were fully implemented, then soon there will be no restrictions on foreign car companies in China and they will be able to take over the entire Chinese car market. Unfotunately, most Chinese people simply don't want to believe that they are in serious dangers of becoming economic colonialists who will be kept poor and dependent on foreign trade that will perpetually keep Chinese people poor while supplying goods to allow the foreigners to live a high standard of living.

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Diunei Lingyen
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Re: Can something like that happen to China?

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April 12 2005, 2:08 PM 

How can you call yourself American when you admit that America is all about enriching the white man at the expense of non-whites?

I hear many stories about how clothing factories in Canada and the US have shut down because they cannot compete with China.  And who's to say that China cannot simply nationalise all assets belonging to hostile countries?  Also, US companies like Cisco are scared about Huawei (which has been making inroads in Europe) in the previously sacred high-tech field of computer network equipment. 


 
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