

The Chinese Decade - Garbage
http://www.cringely.com/2010/10/the-chinese-decade/

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dageshi
I have to say I am quite worried about China's economy if I'm honest.
Everytime you build a big black box that sucks in and spews money but nobody
is entirely sure how it works (think American mortgage market/banking system
circa 2008) and anytime you try and question why it works your told to shut up
because you just don't "understand the new way" I think you should be deeply
suspicious. China is in most respects one giant black box. My main concern is
that they've done a fairly similar thing to what Britain did back around 2000.
When the US hit a recession from the .com bust we responded by opening up the
credit taps and made doing anything and everything on cheap credit very easy.
We avoided recession but in doing so we caused one hell of a
banking/housing/credit bubble ten years later. I suspect the chinese have
unfortunately done the same, they've opened up the credit taps hugely in order
to glide through the slowdown in the west, but with that much credit sloshing
around there will always be problems. I think those problems are China's
regional and local governments, who more or less run their own little fiefdoms
and have been financing much of their operations from land sales and off
balance sheet investments vehicles...

~~~
vorg
Whenever I walk into a hole-in-the-wall shop here in China on a weekday, the
PC screens are alight with share trading graphs. As they said 10 years ago in
the US, "when the taxi drivers are giving share tips, it's time to get out."
Both the Chinese housing and stock markets could blow at anytime, and the
Chinese don't have the institutional memory to deal with it.

~~~
dageshi
And ironically this is around the time of the "new leader" coming to the fore.
Since the last two were preordained by Deng Xiaoping and this one won't be I
expect they will try very hard to paper over any cracks in order to maintain
an orderly succession. I do not like that particular mix of politics/economics
all coming together in one time period.

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PakG1
Just a copy and paste of a comment I wrote on his blog....

\---start comment--- This is funny, I just wrote about the Chinese middle
class a couple of days ago: [http://www.pakg1.net/2010/10/changing-chinese-
mindset-toward...](http://www.pakg1.net/2010/10/changing-chinese-mindset-
towards.html)

I think your points were correct maybe 3 years ago. I don't think they are
now. China still has a lot of issues that could cause it to stumble, but I
don't think a lack of a middle class is one of them.

As well, I cannot think of more Indian executives than I can Chinese
executives. In fact, I think Chinese executives by far have the lead, simply
because HK and Taiwan are more westernized and advanced than maybe even India.
The simple fact is that HK and Taiwan play nicer with China than a lot of
people know, simply because the economics make it worthwhile. There may be a
lot of political strife in the news, but there's a lot of money flowing behind
the scenes.

Finally, as an expat who's living in China right now, I can honestly say that
not only does this middle class exist, their English is pretty darn good. And
I'm finding that increasingly often, they have a 3rd language (in my case, I'm
running into a ton of Japanese speakers).

So in all, I think this view is a tad outdated. India probably has a bright
future, but as anyone who attended the APCAC 2010 conference this year can
attest (and even Indian panel speakers there attested to this), India is way
behind in a number of areas, especially the infrastructure necessary to really
rev its economy up. That investment is only now just starting due to the fact
that their democratic government apparently has its first real majority
government ever.

And you may wish to fix this apparent contradiction when comparing the middle
classes of the two countries....

"China has the population, the will, the educational system, the foreign
currency reserves — everything to make it the next global superpower except
two things: 1) an emerging middle class generation comparable to our Baby
Boomers"

"What I find interesting is that most people just take it as bible truth that
China will be the next superpower because it is so number-oriented (huge
infrastructure dollars, huge manufacturing dollars, higher per capital wealth
than India, bigger middle class, etc…)." \---end comment---

~~~
mrtron
I don't agree with HK and strongly disagree with Taiwan. If you erroneously
include HK and Taiwan executives as "Chinese middle class", the tiny
population of these regions still represent a tiny percentage of the area.

Will there be a larget Indian or Chinese middle class? I agree with the post
that India will have a rising middle class of hundreds of millions before
China. China's top down politics results in hoarding and exporting cash for
wealthy families. Successful Indians seem to have a stronger reinvest in
technology mindset.

~~~
PakG1
When did I call executives middle class? He made two points, one about an
alleged lack of a Chinese middle class, and the other about the breadth of
Indian executives. They are not the same, and I did not respond as if they
were the same. You totally misread me.

Furthermore, if you haven't seen a middle class here in your visit here a few
months ago, you haven't interacted with people here. I'm living here in China
right now, and I interact with the middle class every day at work, on the
streets, in community centres, etc. It's for real. If you live here for a few
months and seriously interact with the locals and STILL for some reason don't
see a middle class, then I'll start taking your opinion seriously on that
matter. But it'll be hard because I'm experiencing the exact opposite.

For the record, the super rich are not the middle class. They are the super
rich. Don't get them confused. The Hiltons and other big family money in the
US can't be considered middle class either, and it really seems to me that
you're referring to those types as your "middle class".

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8ren
What _is_ a functional disporia?

From what my Chinese relatives say, most Chinese businesses are family
businesses. Fukuyama's _Trust: The Social Virtues and the Creation of
Prosperity_ confirms this, and says that it naturally imposes a size limit. So
that may explain the underrepresentation in public corporations.

~~~
sethg
Yeah... my impression is that there are plenty of ethnic Chinese abroad in
small businesses and the professions. I’m not convinced that you have to have
lots of people in your ethnic group becoming C-level executives before your
diaspora is considered “functional”.

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mark_l_watson
I was just in China and one thing that Cringely probably does not get right
is: in China you have a strong majority of people who see it as a social
responsibility to work together to improve the economy. One of my guides gave
me quite a little speil about this, he was earnest, and I basically believed
him.

Otherwise, I agree with the article. BTW, I think it is Thomas Friedman who
has been pointing out that a lot of people in India are disappointed with US
leadership in the world right now: not effective and they want us as a good
buffer to Chinese hegemony.

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chadp
He does have a point about the population aging, but that is by about 2050 if
I remember. They have time to turn it around and make laws to pro-create more
(they are already loosening the 1 child laws in some places as tests)

Other than that, I think he is wrong. India may produce many managers of
companies but it does not matter. The chinese will just buy the companies of
the world and keep existing managers on staff as employees. The chinese don't
really need to show their faces, they just hold the money, the shares and set
the rules. (the golden rule. those who hold the gold, makes the rules)

Next, China has a leg up for infrastructure, it is pretty awesome how fast
they are building airports, road networks, train systems, power grids, water
processing, energy creation, real estate and entire cities. India can't even
clean the garbage from their streets let alone agree on major infrastructure
investments. New infrastructure spurs and even creates whole new local
domestic economies on many levels.

One party rule. Basically, the party can plan the next 5 years, next 50 years
and 100 years and execute in amazing detail. They can and do get their best
party minds together and plan what is good for the people and actually do it.
Can many other countries do the same? Can you see India planning for the next
2 years, let alone 50 years?

English language. They start very young to learn English now in school, it is
mandatory. There are 6 million university graduates per year. In 5-10 years,
there will be 6-10 million english speaking graduates coming from China - PER
YEAR.

Energy. Both china and india are net importers of energy. China is making
deals to get Energy (ie. oil) everywhere and anywhere they can. Nigeria,
Yemen, Saudi, Iran, Iraq, Caribbean, Canada and every place on the planet they
can get it from. Everywhere the 'West' thinks it is not moral, the Chinese are
there building infrastructure, making deals and securing energy for their
people. Smart. What is India doing to secure their future energy needs?

Middle class. Have you been there to see the 300+ million people that are now
buying apartments, cars, make up, creams, designer clothes et al.? Yup, more
people than all of the USA is their newly created middle class. Beijing alone
is putting 1000 new cars on the road EVERY SINGLE DAY. There are hundreds more
cities with more than 1-2 million people.

Functional diaspora. This argument is pretty moot or even leans towards the
Chinese I think. So what you have Indian individuals "integrating in
companies". They are individuals, and it means they can produce workers that
integrate in other societies, as individuals. The Chinese also have diaspora.
It is called China Town. In almost every city in the world has one. They are
organized, band together, get real estate in close proximity, create small
businesses and make their way and excel in almost every foreign country in the
world. Do you see any "Indian Town's" in any city in the world?

My money is on China for sure.

~~~
yardie
Wow, if this is not propaganda...

One party rule is a joke. 50 years ago China was a backwater and it wasn't
until the 80s when they experimented with capitalism that they even got to
this point. 50 years ago the big government plan was planting enough rice to
feed everyone. So how much of that 10, 20, 50 year plan was put into effect?

Anyway I wouldn't consider any Chinatown a positive. Except in a few countries
(Singapore) Indians don't have an Indian Town because it isn't necessary.
Chinatowns exist because of a failure for chinese immigrants to integrate. So
they turn to an insular community that can provide resources that they are
reluctant to ask of their native neighbors.

In every Chinatown I have been to it is always, always the rich chinese
exploiting the ignorant immigrants. This will be the diner that pays staff
less than minimum wage, landlords subdividing apartments, and others
extracting a royalty for getting you a job. And lets not get started on how
local gangs have infused themselves into Chinatown.

~~~
kajecounterhack
Hey. Capitalism and real-world economics saved China, yes. But they were and
are still under one-party rule when it happened. Their meritocracy, as corrupt
as it can be, is just another approach to solving the problem of government
and imho is as valid as any western approach. You cannot overlook the
efficiencies of their system in comparison to western governments. There are
both pros and cons but it's kind of narrow-minded to say it's all negative.

Also I find your generalizations about Chinatown a bit offensive. "Chinatowns
exist because of a failure for chinese immigrants to integrate." Isn't this
true of every cluster of immigrants? You make it sound like it's easy to
integrate or something. "In every Chinatown I have been to it is always,
always the rich chinese exploiting the ignorant immigrants. This will be the
diner that pays staff less than minimum wage, landlords subdividing
apartments, and others extracting a royalty for getting you a job. And lets
not get started on how local gangs have infused themselves into Chinatown."
How many chinatowns have you been to, and I'm sure you know all the landlords
and people helping each other out.

I think you're giving immigrants less credit than they deserve. It's hella
hard just to decide to stick around here. You can also look up Asian-american
bias -- integration isn't just about Asians wanting to integrate. There is a
fair amount of anti-asian sentiment in the US. "So they turn to an insular
community that can provide resources that they are reluctant to ask of their
native neighbors." << This kind of generalization implies that an immigrant
has a relationship with their "native neighbors" which is hardly the case when
you've just arrived.

Thinking about it the other way around: if you didn't speak Chinese very well
and moved to China, wouldn't you also tend toward other english speakers? It's
damn hard not to rely on someone you can talk to, when you can barely
communicate with your plumber.

~~~
yardie
The russians also had one party rule with 5, 10, and 50 year plans and how did
that turn out? More dissenters dead and disappeared than all world wars
combined. Grand projects rusting away in former soviet blocs. And the supposed
efficiency comes at the price of peoples lives and property. I can assure you
the people living around the Olympic village weren't delighted to be kicked
out of their homes. I'm not saying. So when you make the rules and can apply
them as you please damn right its easy to be efficient.

I don't know how you can find my generalization offensive but not your own.
Chinatowns exists because they are a net positive how? Yet Indians, Malays,
Japanese, and Koreans don't need them. I've been only to the C-Towns on the
east coast, and lived in one. And it is the rich chinese exploiting the poor.
You don't hear about white, blacks, indians, or any other nationalities
exploiting immigrants in chinatown. It took NYCPD a decade and a half to crack
the triads in NYC C-Town and they are still exert a lot of influence.

As to asian american bias this argument is weak since out of all emigrants
(except europeans) Asians face the lowest amount of overall discrimination.
Americans don't trust the chinese-americans to run the country (due to that
same insular community being perceived as unloyal) but they trust them more
than they do africans or african americans to do business with according to
this study <http://abcnews.go.com/US/story?id=93457>. I've never met a taxi
driver that says he won't pick up chinese or wouldn't stop in chinatown.

If I did move to China I wouldn't restrict myself to english enclaves, working
for english businesses and only befriending english speaking people. But I'm
not your typical american either.

~~~
jhancock
9 years back, I took a group of Shanghai government officials on a tour of
U.S. tech companies. In attempts to appease their stomaches we went to
Chinatown in D.C., NYC, SF. They were all terribly disappointed with the food.
Why so? Well, it turns out the Chinatowns in the U.S. aren't quite a fair
representation of all of China. Be careful about transferring your knowledge
of one to the other.

As to your assertion that if you did move to China you would immerse yourself,
well, perhaps you should go give it a try. I did it for 10 years. I'm not your
typical American and I needed to come up for air every now and then and re-
assimilate with my Western brethren.

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natch
When I look at the executives he's talking about here in the US, I don't see
Indians; I see Americans of Indian origin.

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rdl
In Silicon Valley, I've never noticed a shortage of either Indian or Chinese
engineers and executives. Both seem to have a pretty functional diaspora, at
least on the west coast. Maybe in Boston, the Chinese community is more
insular.

I also think a perpetuation of huge income/lifestyle disparity is much more
likely in India and China than it would be in the west -- a middle class of
50mm vs. 300mm in China isn't necessarily going to greatly hinder them if
those 50mm are in the right industries. China can continue to trade domestic
consumer quality of life for external competitiveness. It's probably not the
best thing for maximizing utility for the Chinese people overall, but it
certainly maximizes national prestige.

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jhancock
Cringely has a rambling thesis here. Too many loose ends to properly critique.

I will give him this: looking up functional diaspora in the big G yields
equally rambling results.

1 - first 2 entries are Cringely's own

2 - third entry is a Google book excerpt on "Hitler's black victims" which has
no use of the word diaspora

3 - fourth is the Facebook open source "competitor"

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macco
Why is it always: they win we loose. That is nonesense. They might win, but we
don't automaticly loose. There is some misconception in there. Economics
aren't sports.

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aneth
It's an interesting debate to have, but this article is a bunch of hogwash.
China has a booming middle class and an extremely "functional" diaspora.

<http://www.wikinvest.com/concept/Rise_of_Chinas_Middle_Class>

