Re: <nettime> Brits in hock--or, Atlas shrugged again

[Felix Stalder <felix@openflows.com>]

On Saturday, 22. March 2008, Brian Holmes wrote:
> Reading a book called "China's New Consumers"--where
> you find out that by comparison to the West, there really aren't any--

Apparently, it's not just because China is, overall, still a poor     
country that there are so few consumers, but a result of government   
policy, at least according to a great article which appeared in the   
Atlantic Monthly earlier this year. Below is a quote, but the whole   
article is worth reading.                                             

http://www.theatlantic.com/doc/200801/fallows-chinese-dollars/

And the government doesn't want to increase domestic spending
dramatically, because it fears that improving average living
conditions could paradoxically intensify the rich-poor tensions that
are China's major social problem. The country is already covered with
bulldozers, wrecking balls, and construction cranes, all to keep the
manufacturing machine steaming ahead. Trying to build anything more
at the moment--sewage-treatment plants, for a start, which would mean
a better life for its own people, or smokestack scrubbers and related
'clean' technology, which would start to address the world pollution
for which China is increasingly held responsible--would likely just
drive prices up, intensifying inflation and thus reducing the already
minimal purchasing power of most workers. Food prices have been rising
so fast that they have led to riots. In November, a large Carrefour
grocery in Chongqing offered a limited-time sale of vegetable oil,
at 20 percent (11 RMB, or $1.48) off the normal price per bottle.
Three people were killed and 31 injured in a stampede toward the
shelves.

This is the bargain China has made--rather, the one its leaders have
imposed on its people. They'll keep creating new factory jobs, and
thus reduce China's own social tensions and create opportunities
for its rural poor. The Chinese will live better year by year,
though not as well as they could. And they'll be protected from the
risk of potentially catastrophic hyperinflation, which might undo
what the nation's decades of growth have built. In exchange, the
government will hold much of the nation's wealth in paper assets in
the United States, thereby preventing a run on the dollar, shoring up
relations between China and America, and sluicing enough cash back
into Americans' hands to let the spending go on.

The Chinese public is beginning to be aware that its government
is sitting on a lot of money--money not being spent to help China
directly, money not doing so well in Blackstone-style foreign
investments, money invested in the ever-falling U.S. dollar. Chinese
bloggers and press commentators have begun making a connection
between the billions of dollars the country is sending away and the
domestic needs the country has not addressed. There is more and more
pressure to show that the return on foreign investments is worth
China's sacrifice--and more and more potential backlash against bets
that don't pay off. (While the Chinese government need not stand for
popular election, it generally tries to reduce sources of popular
discontent when it can.) The public is beginning to behave like the
demanding client of an investment adviser: it wants better returns,
with fewer risks.





--- http://felix.openflows.com ----------------------------- out now:
*|Manuel Castells and the Theory of the Network Society. Polity, 2006 
*|Open Cultures and the Nature of Networks. Ed. Futura/Revolver, 2005 


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