Overheating

Sorry about the long break, I was on vacation this time, not just lazy as usual.

China's construction boom has turned into an adventure into the ridiculous. Well, it already was ridiculous, but now even the central government is trying to stop it/rein it in. The economy is growing at around 10% and the central government is worried about overheating. So, they tell banks to cut down on their lending, especially for construction and real estate projects. They also restrict foreign investing, which is focused on luxury housing, according to the article. But, governors, mayors, and local officials will have none of it. They pressure local institutions to fund their pet projects which are insane in scope and have no economic justification. All this construction is distoring the materials market, probably steering it toward a big crash.

Like the earlier 20th century China, fiefdoms are merely being built by the local officials. It is all based on prestige and power grabbing. Nobody cares about the common Chinese. They toil away at their low wage job making stuff for the West while those with power get rich and feel important. This is no different than in America, except for there isn't even the pretense, other than the Communism being "for the worker", that this boom is for the people. If lives improved and wages went up, who would make everything? China is producing enough capacity to build about 2 million more cars than it has demand for. Where will these cars go? How many loans will be forced upon local banks to get regional producers solvent?

The history of China is about those with power controlling the masses through ideology while enriching themselves. The whole Confuscian system is based on classifying people and putting them in their proper place while respecting people with power. It was/is based on merit. Merit is easier to build with money, though the system preaches hard work and perseverance. The latter aspect allowed it to endure and validated it to a degree. But, there was always those that were born into wealth, respect, and power. Today it is no different. The sons and daughters of the party's elite have been free to wield their influence to gain wealth and power, like George W....

The only protection that the world has against the twin behemoths of China and America is to insulate itself through smart planning. These two countries won't change without revolution or catastrophe, both inevitable. Everyone must prepare by encouraging renewable resources and redesigning the economic model to not reward consumption. The world is aging and the developed countries have run out of time to follow the traditional model. Quality of life, not quantity of stuff, must be the future agenda.