Shhh...don't tell anyone, but China is Growing...

For true free-market/laissez-faire conservatives (of which there seem to be fewer and fewer these days), it truly seems that their watching of China's capitalistic naissance is comparable to watching a baby being born with 24k gold genitalia and platinum shoes.

Why? Flipping through the shows today, I ran into Larry Kudlow (a man with whom I agree with perhaps one percent of the time) saying (paraphrased) "at least in China, they are actually embracing capitalism, something I don't think America can do anymore...and it's exciting to see..."

What seems to get lost on everyone but the peak oil community is that, with the current set of world circumstances, the coming to an end of a centrally controlled economy with over one billion people clamoring to consume is obviously a very very scary thing in a time of limited resources. Why don't people like Kudlow get that?

Sure, China has been getting its coverage over the past few months, much of the detail of how much the Chinese economy is growing, which was around 9.5% last year. That number, when you compare it to the paltry 3.6% growth of the US, and the even more limited growth of the EU, is even more impressive.

But, more importantly, if you look under the hood of the Chinese economy, all of that growth was within a certain amount of Communist party government control last year. This article from IHT brings to our attention two facts (that I wasn't aware of...these just add to the trepidation for me), 1) the Chinese government has less control over investment in the economy now than last year, and 2) investment rates in property/real estate/investments are growing in the mid 20%'s. Yes, I said around 25%. That's a lot.

Then you throw in the politics of the potential re-valuation of the yuan...

Then you talk about the potential re-valuation of commodities like oil in other currencies...

Then you starting thinking about China's role geopolitically, especially with regard to North Korea...

Then you start looking more and more at the economic picture of this whole thing...and it just gets daunting.

Who out there is an economist? Am I far off on this? Where's some good sources to read on this? Has anyone integrated these ideas with peak oil?

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There was an interesting article in LA Times Opinion yesterday that provided some interesting insight into the Chinese economy. It will shed some light on the known economy and the unknown (and maybe even the known unknowns...As Rummy likes to say).

Based on what it says, tracking economic growth in China is, to say the least, a difficult task.

So far some of the best economist's comments on China have come from Brad Setser, and today he's on to Five myths (or half truths) about China - Brad's very good about reading and replying to comments, and he has (in the past) shown awareness of the oil situation (although he's not necessarily into peak oil). For all I know, he even reads this blog.

So go on over and ask him - tell 'em fatbear sent you....

(Also, he - and his readers - is/are rather good in directly searchers to the right place if it isn't there.)

Kudlow is incapable of seeing anything in a holistic manner because of his dogmatic blinders. I know a large group of rather conservative retired investors who regard him and his sidekick Cramer as a POS.

Not too long ago (1999)I did an academic survey of China's economy and concluded that the 21st century would be the Asian Century (all of Asia, not just China). This was before I started in-depth study of fossil fuel depletion and environmental overshoot. Given what I know now, I still stand by my previous conclusion. This brings me back to a question I asked in another thread, did anyone know of Sir Halford MacKinder and his work. He is the father of modern imperial geopolitics and the starting point for a holistic understanding of likely future developments.

As for sources, Asia Times Online,, the HK English language newspapers, Far Eastern Economic Review, Singapore papers, and other English language asian newspapers provide current items (for a portal, while there is a plethora of publications related to the development of China's economy that have been published over the last 10 years available at any major university library.

For me, the key is the emerging strategic and economic linkage between China, Russia and India, which will eventuate the addition of the rest of Eurasia--even Japan and the EU--which is why I stress knowing MacKinder. This is anethema to US imperial designers, which is why they tried to destroy Russia through "shock therapy" and Yeltsin. All one need do is look at the distribution of strategic resources and add the bullying USA to understand the logic driving the linkage. Back in the 1960s there was a idea called Dependency to describe the relationship between the US and Latin America. While incomplete, the core of the idea can be used to describe the position of the USA regarding future energy and other resources.

D'oh! Just noticed Setser is on TOD blogroll. Oops....

not to worry fatbear, I should have thought of him before I even posted! :)

China might be the Hare, but India is the Goose.

Keep your eyes on India - that's where the future is barrelling down the tracks...

GOOSE - what the hell am I talking about???!!!?!??!

Sorry, I think I was channelling the enigmatic Mr Greenspan there... obviously, I meant TORTOISE.

I don't even wanna know the Freudian interpretation of that little slip.

I quite liked the goose analogy - it made no sense at all - but that just made it all the more cryptic as I racked my brains for the secret power possessed by geese (the Romans had a thing about geese, for what its worth - saved the town from invading gauls apparently).

I'm not so sure about hare and tortoise comparisons, but geographically India has a huge advantage over China - its a lot closer to all those energy resources...

Karlof - thanks for the MacKinder reference - very interesting. If control of eastern europe is the key to world domination (as I believe he suggests), then what happened to the Soviet Union ? Was communism too much of a burden for an empire to bear ?

Who rules East Europe commands the Heartland
Who rules the Heartland commands the World-Island
Who rules the World-Island commands the world

let's not forget:

Don't ever get involved in a land war in Asia.

The great scene in "The Princess Bride" when Cary Elwes' Wesley (in his secret Dread Pirate Roberts identity), having already defeated the swordsman Inigo Montoya and the giant Fezzick in separate tests of skill and strength, engages in a test of logic with the supposed genius Vizzini. Wesley places an undetectable poison in one of two wine-filled cups, Vizzini would choose one to drink from one and Wesley must drink from the other; in a perfect gamble, one man would live and the other would die. Of course, Wesley had already cheated-- having built up an immunity to the poison, he placed the poison in both cups-- and drank knowing that Vizzini would lose. But before dying, Vizzini brags:

You only think I guessed wrong - that's what's so funny. I switched glasses when your back was turned. Ha-ha, you fool. You fell victim to one of the classic blunders, the most famous of which is "Never get involved in a land war in Asia", but only slightly less well known is this: "Never go in against a Sicilian, when *death* is on the line.". Hahahahahah.
[Vizzini falls over dead]

as taken from
which actually contains a nice description of the current state of affairs of our military situation in Asia.

Here's a good source for China news,
the China Digital Times, a project of the U.Cal. Berkeley Journalism Department.

I also liked the goose analogy - there is definitely something about geese vs. hares - after all, geese can travel on three planes (air, land, water) while hares are limited to one.

As for the romans and geese, IIRC they inadvertently served as watchdogs and alerted the garrison to a sneak attack. Also a good comparison with hares, who run away at the first sign of trouble.

The Chinese are going through a manufactoring era. This will increase there oil demands as it did ours when we used to make alot of things here. They also tell there people to buy gold ??! Somethings going on and they are preparing for it. The US will wake up from its dreamland unprepared. Good Luck to ALL!! you had best prepare for yourself and forget the masses they are not listening.

Geese early warning systems, eh? Well, maybe I meant to say 'Goose' then, and my backtracking was just a clever ruse...


Still, my point about India still stands. I've been monitoring stories in the Oz press recently about India and China - there's a growing consensus that India will be a lot more important to us in the future than China (or anyone else, actually).

India will soon be projecting power into the Pacific and Indian oceans - this is going to change the balance of power in our part of the world immensely. For instance, Indian carrier fleets will be visiting our ports long before Chinese ones do.

Similarly, China may be a manufacturing/industrial powerhouse - India is already becoming a post-industrial one.

The sources of 'soft' power are already there: English language, democracy, largest film industry in the world, excellent education system (graduating around 10,000 engineers a year), a growing dominance in IT (Bangalore might be stealing US jobs, but it's also stealing Indian graduates back - the brain drain is starting to reverse).

You've only got to travel in Asia to realise how much of a challenge to the dominance of the US culture industries (Hollywood, computer games, etc) India poses.

Bollywood films are now starting to get mainstream release in suburban megaplexes in Australia. Only a few - but it is growing quickly.

China may have the PLA and a massively growing economy - but India is better placed in the long run.

floop - What press are you monitoring in Oz ?

I must be sadly out of touch, as I've failed to note the surge of interest in India - its been 90% China whenever I read the local press (admittedly thats just the AFR and SMH, and not every day of the week).

I did see "Bride and Prejudice" though - so I'll agree on the growth of the Indian "soft" industries...