China has it bigger (II)

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Chinese economy hockey stick

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As it was previously noted, China has surpassed Japan as the second richest country in the world. So, why don’t we see Japanese immigrants crossing the Tsushima Strait and the East China Sea in small boats? Oh, yes, their government must have censored this valuable piece of information, so they still believe they are living in paradise.

The reason Japan has fallen into this endless pit of economic doom is simple: central planning. As Yonathan Amselem points out, Keynesian “Central Planning Has Turned Japanese Corporations into Welfare Queens” thanks to the gigantic central state and its related central bank. Demography doesn’t help. As he puts it, “A country that consumes more adult diapers than baby diapers is a nation on its way to the dustbin of history”. But this is also the case with China, and although Chinese kids defecate in the street rather than their diapers, the numbers just do not work –especially because, since Japan needs to find a substitute for their own lack of young labor force, they are allowing people from the second richest country in the world into their poor, third-rate capitalist economy. Chinese people simply love Japan, and they are obviously willing to sacrifice themselves, and to leave behind their surprisingly wealthy lives, to aid the Japanese nation and use their third-rate toilets.

Sarcasm aside, central planning is exactly the main problem China faces, and also the reason behind their false numbers when it comes to the economy. Anyone who has been to China knows how difficult is to find anything you need near the place you live. If you want to buy DVDs you may have to take the railroad because there is no store near you. If you want to go to the supermarket, you better take the bus. It is absolutely inconvenient for daily life, and this is why most people buy everything, including food, water, or soft drinks, online. This is the result of central planning –the State telling people where they should open their business, instead of letting consumer demand decide it. And if you don’t believe me, just go to Hong Kong and see the difference.

Take any major city in China. Because the state has planned everything and business is centralized in different areas, it is impossible to move around these cities in rush hour or in national holidays –all holidays are national and central planned–. Just imagine 1.4 billion people having holiday at the same time and going to the same exact few places to enjoy their time –because yes, holiday destinations are also centrally planned.

And as the Chinese economy grows, so do their Orwellian plans: they want to create the biggest urbanized region in China by combining the cities of Peking, Tianjin, and Hebei –Peking being the political and labor center, Tianjin focusing on research and trading, and Hebei housing the new workers, who won’t be able to afford a room in Peking and Tianjin given the real estate prices there. This, of course, means more money into housing developing in Hebei which, in turn, means more “fake” GDP numbers, but also additional problems such as millions of people moving daily from Hebei to Peking. And this in turn leads to traffic jam, poorly built roads and railroads, accidents, and so on. In August 2010 China experienced a traffic jam 62 miles long for 12 days outside Peking, with cars moving at 2 miles per day. And what is a traffic jam?

“A collision between free enterprise and socialism.

Free enterprise produces automobiles faster than socialism can build roads and road capacity.”

The quality of the buildings hastily constructed in Hebei could also be a reason for concern, as it is the lack of an infrastructure, which usually develops as the city grows under citizen demand rather than under government planning. For example, the city of Yanjiao, in Hebei, “has grown so quickly that it has 700.000 people but no bus terminals, no movie theaters, and only two tiny parks”.

And by the way, do you know why the Chinese government wants to create this Orwellian Peking-Tianjin-Hebei city, besides artificially increasing their GDP? To keep up with the more prosperous south. And why is the south more prosperous? Because it not only has Hong Kong to take advantage of its capitalism, but it is also far from the political center of the country and, thus, faces less regulation. Guangzhou, one of the richest cities in the south of the country, is as “inconvenient” as any other Chinese city. You have to walk great distances to reach a supermarket or anything else, but it is still better than the north. For instance, when I was living near Sun-yat Sen University in Guangzhou, the MTR was only five minutes away and I was lucky to have a supermarket just downstairs. But when I moved to Nankai University in Tianjin, the MTR was twenty minutes away across highways and deserted gargantuan buildings, and the nearest supermarket was so far that I usually chose a taxi instead of the bus.

Here lies one of the greatest differences between socialism (Europe) and communism (China): in a socialist economy, the free market produces cars faster than the government can build roads; in a communist economy the government controls demand to such an extent that there are neither enough cars nor enough roads to meet demand.

But you get 7% GDP!

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