On 2013-08-21, at 6:25 PM, raghu wrote: > Ok, now we are finally moving past the strawmen
What "strawmen"? You objected to the subject of this thread, and I replied to your objections. But no matter. > And what is the nature of this imbalance which Pettis and others are so > exercised about? It is primarily the transfer of income from the household > sector and domestic consumption, to the corporate sector (state-owned and > private) to subsidise investment and export. > > I don't know if he is right, but I don't think the argument is so easily > dismissed. Pettis isn't the only commentator to make the point. It's received wisdom, including with the ruling group of the PRC, that deposit rates been maintained at a level which have benefited China's corporations at the expense of savers, and that consumer-led growth requires that they be raised, along with wages, to provide more disposable income to households. In line with this, the ceiling for banks to pay interest on deposits was raised last month from 10% to 30% above the benchmark, with the intention to move gradually to rates set by the market. > In the aggregate the "losers" in a big readjustment will be the coastal > exporters and the corporate sector more generally and the "winners" will be > households. It is not at all clear that the household sector is politically > that powerful compared to the corporate sector. Chinese exporters at the lower end of the value chain have for some time been losing business to firms relying on cheaper labour in Southeast Asia and elsewhere, but it's not expected that the "corporate sector generally" will be hurt by the state-driven rebalancing of the economy. It's anticipated that corporations producing higher-end goods for the world market and those in the rapidly expanding consumer goods and services sector will continue to be profitable, barring a deeper crisis of the world economy. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
