Tag Archive for 'China'

The Acid Test for Democracy

It is rather a paradox that while the cradle of democracy – Greece – is battling to save its economy through various bail out and stimulus packages , China is singing the virtues of a one party rule in boosting its economic growth and global dominance . A matured democracy like US is also getting restive about its ‘ duology ‘ of two party system .

Are we as a global community losing our grip over the time tested democratic institutions ? Are we misusing or not exercising due care and caution in electing our political leaders ? While a democracy now only means the right to vote for a common citizen in any country following this process , the duly elected leaders many times resort to taxing the masses to bail out the [rich] classes!

One way out is the right to recall  your representatives when they fail to deliver but this is not possible except through revolutions which turns mostly violent . After all ,  Gandhiji’s strategies are not working now the way it should in many situations .

There is no easy way out and in the long term people themselves [hopefully] will find an answer to this malady .

Determinants of Economic Growth

A positive outlook for economy has many things in common with your anatomy – your body weight vs flab and good vs bad cholesterol in your body . While , the US boasts of a global outlook with scientific temper , innovation and entrepreneurship and a positive population growth post the baby boomers retirement  , India boasts of a young profile for 60 percent of its population with an annual growth rate of over 8 percent for its economy . Both Europe and Japan are negative in its population growth while scoring on other factors .

Productivity is another important determinant of economy and most of the third world countries suffer from poor productivity – with China , Japan and South Korea bring notable exceptions . In order to jump start an economy , a country needs to focus on its productivity and elimination of waste both wasteful processes and wasting scarce resources . Energy conservation and a free market access also facilitates economic growth .

A democratic set up with transparent governance and a political system with adequate safeguard against corruption is essential for any national economy to grow and prosper . Educating the masses and giving them good health care and right to property is also necessary for social security and enduring economic health .

The current unrest in the Middle East , the Jasmine Revolution , Arab Spring etc have come about due to the opening up of the global economy and due to the  spread of information and knowledge because of the internet and social media . This trend will continue not withstanding the road blocks on the way from countries like China and Iran .

India and the US are both favorable placed in this aspect and can hope to leverage the good factors mentioned above for a robust growth in their economy .

Short Selling China !!

Yesterday [14th Jan ] , Indian newspapers carried three  reports/features  on China .

AP[Associated Press] reports the display of a rare 400 year old map at the  Library of Congress , Washington DC  created by Matteo Ricci , a Jesuit missionary from Italy at the request of Emperor Wanli.  This is the first ever map in Chinese depicting the Americas  and associates North America with bison and wild horses. More important , the map puts China in the center of the World!!. Remember the Siamese King in the Oscar award winning film ” The King and I ” where he gets a map redrawn with Siam in the center of the Universe!! .

Associated Press Copyright

The second report concerns the bold step taken by Google to defy Chinese censors and also threatening to quit China over misuse of the censorship clause by the government agencies . This development has great impact for global business  and may decide the shape of things to come in Business dealings and investments in China.

The third report relates to a feature by Thomas L Friedman reproduced with permission from the New York Times titled ” Red Alert : Is China world ‘s next ENRON ? ” . The article quotes from the Herald Tribune of last week where the front page story quotes the famous James Chanos [he called ENRON a fraud and made a fortune in 2000 short selling its stock] who warns that China is Dubai 1000 times or more. Chanos is looking for ways to short sell Chinese stocks before the Bubble bursts .

Even though Friedman goes on to play the devil ‘s advocate for Chanos in the article with reasons , we can see a pattern emerging both in the political and economic scene about the future of China . The phenominal 16 % growth reported this year can easily be derailed by corruption in high places , the economic disparity in urban and rural areas , over dependence on Oil and also the disturbed signals from Tibet Autonomous Region. The whole world is watching the developments in China and James Chanos could still  be two times lucky !!