{"id":462,"date":"2010-07-27T13:08:00","date_gmt":"2010-07-27T17:08:00","guid":{"rendered":"http:\/\/www.intuitiveinvestor.com\/web\/?p=462"},"modified":"2018-08-17T15:51:22","modified_gmt":"2018-08-17T19:51:22","slug":"mischief-in-china","status":"publish","type":"post","link":"https:\/\/jasonapollovoss.com\/web\/2010\/07\/27\/mischief-in-china\/","title":{"rendered":"Mischief in China"},"content":{"rendered":"

If you have followed the blog for awhile you know that I have alluded to the fact that the Chinese economy is structurally unsound many times.\u00a0 The reason is that its economy is not run for profitability, but for full employment.\u00a0 If the single-party Communists couldn’t guarantee every Chinese a minimum standard of living via full employment then there would be no reason to stomach an oppressive, single-party, like the Chinese Communists.\u00a0 Oh, and corruption as a practice is practically the invention of Communism.\u00a0 China is rampant with dirty, nasty corruption.<\/span><\/p>\n

So I have been watching for almost a decade now for signs of cracks.\u00a0 Western investors in China will ultimately demand profits from their Chinese operations.\u00a0 Chinese workers will ultimately demand that they are rewarded for their sacrifices to the Motherland.\u00a0 Periodically there have been workers riots over the past decade, but they have never gained much momentum.\u00a0 The Chinese government has stamped them out quickly and definitively.\u00a0 But now the protests are getting more frequent and more intense.<\/span><\/p>\n

My favorite source for international event analysis, Stratfor, reported last week that workers strikes that began in mid-May have continued.\u00a0 Additionally, more workers strikes are popping up throughout China, especially in rural areas.\u00a0 Most interesting is that Chinese workers are increasingly organizing themselves into protest rather than operating through Communist party channels.\u00a0 This is a sea-change; one that should scare the heck out of the Chinese government.<\/span><\/p>\n

Here is what Stratfor has to say about the situation:<\/span><\/p>\n

“The labor concerns have also presented a problem for the central government. On one hand, Beijing is striving to restructure the society through policy. Part of this means encouraging provinces to raise minimum wages to put more income in workers\u2019 pockets and boost household consumption. Along these lines, Beijing can tolerate more frequent worker demands for increased wages and sympathetic coverage in the state press as long as the strikers go through official channels. On the other hand, the collaboration between foreign companies, local governments and crony official unions is starting to drive workers to organize themselves, which is the exact opposite of what Beijing wants.”<\/span><\/p>\n

For China’s economic miracle to continue it has to switch from a full-employment model to a max-profitability model.\u00a0 Otherwise the Chinese will experience capital flight and an erosion of foreign investor confidence.\u00a0 But this means that folks who have counted on a job for generations will lose their jobs.\u00a0 This will lead to social unrest and upheaval.\u00a0 This day of reckoning is coming as the Chinese switch from placating the labor population to placating the capitalists.\u00a0 My feeling is that this is not going to be pretty for anyone involved: workers, politicians and capitalists (i.e. investors).\u00a0 While it may not be about to happen – keep these irreconcilable tensions in the back of your mind if you are considering an investment in China.<\/span><\/p>\n

Jason<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

If you have followed the blog for awhile you know that I have alluded to the fact that the Chinese economy is structurally unsound many times.\u00a0 The reason is that its economy is not run for profitability, but for full employment.\u00a0 If the single-party Communists couldn’t guarantee every Chinese a minimum standard of living via […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-462","post","type-post","status-publish","format-standard","hentry","category-the-blog"],"_links":{"self":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/462","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/comments?post=462"}],"version-history":[{"count":0,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/462\/revisions"}],"wp:attachment":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/media?parent=462"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/categories?post=462"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/tags?post=462"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}