Compare and Contrast

November 20th, 2012 at 10:00 am by David Farrar

The Party constitution:

Co-operation, rather than competition, should be the main governing factor in economic relations …

Bloomberg reporting on the Chinese Communist Party:

Zhou’s comments underscore pledges by the ruling Communist Party, which last week completed the most important phase of a once-a-decade power transition, to promote freer movement of capital in and out of the country for investment purposes and to make the exchange rate more market-based.

Ironic, as NZ Labour argues against foreign investment and having the Government set the exchange rate.

“Expectations are high” for change as government intervention, ranging from excessive regulation to rigid price controls, has become “unbearable” over the last couple of years, said Li Jiange, head of the country’s biggest investment bank and a vice chairman at the government-run company that holds stakes in state-owned lenders.

Rigid price controls? You mean, like on houses?

“We need to review what the Chinese Communist Party decided 20 years ago: that is, to let market forces play a fundamental role in allocating resources,” he said.

So 20 years ago the Chinese Community Party decided to go in the opposite direction of what NZ Labour is now promoting. Note their growth rate!

The new leadership will probably unveil market-oriented changes in late 2013 after a plenary session of the party’s central committee, Li said. Reforms will focus on reducing government intervention in the economy and breaking up state monopolies, he said.

Excellent. A growing Chinese economy will be good for New Zealand.

The yuan has appreciated about 33 percent against the dollar since the revaluation.

And Parker and Norman think we can stop the US dollar depreciating against the NZ dollar!

They may face economic expansion of 7 percent in 2013, the slowest in 23 years, according to Pacific Investment Management Co., which runs the world’s largest bond fund. Standard Chartered Plc sees a risk of annual expansion slumping to between 3 percent and 4 percent within 10 to 15 years without market-driven change to introduce more competition for state enterprises.

Hmmn, competition for SOEs. We could do with more of that in NZ!

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6 Responses to “Compare and Contrast”

  1. Lipo (229 comments) says:

    So are you saying Democracy (as practised on NZ) is not as great as it is promoted to be versus China?

    [DPF: I'm talking economics, not democracy. I support both free speech and free markets]

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  2. Viking2 (11,283 comments) says:

    Will be interesting to see next years changes as the companies are unshackled.
    The good thing for the world is the rise in the yuan as that makes them less competitive and allows other countries to rebuild their manufacturing capacities again. The US is attempting this through money printing but that won’t work.
    Inflation of course will be the result of higher prices. Those prices will also be fed by Chinese not wanting to work for nothing anymore as their own standard of living rises.
    Next interesting issue will be the finding of abundant Natural gas and oil on their own land. It will of course happen. Then the Arabs and the Aussies will be in big strife.

    Oh and by the way the next 6-12 months will be the cheapest time ever to build a new house. Some 55% of the cost is either imported or established by imports and oversea’s prices. When our dollar goes down against the yuan the costs will rise.

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  3. Harriet (4,616 comments) says:

    China will grow old before it grows rich. It’s the demographics.

    And also due to both the one child policy, and the lack of welfare & superannuation, each husband and wife will have to support themselves, their child[s], and both sets of inlaws.

    And the majority of all that will be serviced through low cost manufacturing!

    The Chinese won’t be rich for a very long time.

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  4. Lipo (229 comments) says:

    My point DPF is that it is all fine and well talking about democracy when you are sitting in the shit house. Democracy as an end is useless if you can’t put food on your table

    [DPF: While the purpose of democracy is not wealth, but rather freedom, the two tend to be linked. Democratic countries overall have a much much better record of being able to feed their citizens]

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  5. Paulus (2,565 comments) says:

    The Yuan is still tied to the US$

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  6. Fletch (6,151 comments) says:

    Compare: America today and the Weimar Republic.

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