From CSM, a fascinating story on how China’s thriving market, cheap credit, government complicity, and pent up demand conspire to create what are surely some of the most spectacular malls in the world. The one in this story is 6 million square feet, with 230 escalators and 1,000 shops. As many of these stories as I’ve read, I still find it astounding that this is after all China –as in formerly communist China–we are talking about.
Source link: http://blog.mises.org/2770/let-a-thousand-malls-bloom/
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From the article:
“China’s big appetite for budding sales combined with major loans from its highly centralized banking system is one form of the expression “market Leninism,” used by Perry Link of Princeton University to describe China’s hybrid red capitalism.”
It sounds like these malls may be carrying their own seeds of destruction.
A few days ago, one of the national evening news shows ran a short story on China’s economy. I was stunned to see the Chinese driving to work in Volkswagens on 6-lane freeways. I’m not sure I was so surprised, but after years of thinking of China as a place where people rode bicycles on narrow streets, seeing them drive cars on wide freeways was quite a shock.
And yes, China is priming for a hard fall. I worry both about the stability of market reforms post-collapse, and its peacefulness and political stability post-collapse.
- Josh
Josh,
You mirror my views in this – usually when someone partially deregulates the market economy, you get the market working in a lopsided way, and create different incentives/disincentives for it.
For example; imagine someone getting rid of wage and price controls on the market. Aside from hearing the doom and gloom predictions from liberals, great things would happen. But now imagine that while price controls were lifted, someone decided that companies should only get a certain ‘cut’ of the windfall profits that would result. I’ll leave you posters on here to postulate the effects of this, but the overall effect, on a political scale, would be to tarnish capitalism.
It’s like the Enron deal really; everyone blamed the crash of one company for an entire economic recession, and said that capitalism didn’t work.
The free market private property dragon has been let out of the bag. The pendulum is swinging toward a greater degree of free market transactions and the choice and ownership that brings. As Mises was right about modern economies being impossible under socialism because of the lack of economic calculation so too do more impervious political barriers become erected in ever more modern economies against draconian bolshevik style communist “revolutions” reducing standards of living by restricting free trade.
So what if the mall goes bankrupt? Others will buy it on the cheap and sell profitable stuff. China could quickly become the richest nation by merely refusing to honor the theft declarations of western civilization patents and copyrights. Not only would they sell western invented products to the rest of the world cheaper but soon intra-china competition would produce much better chinese invented products as they would not be shackled with patent land mines and could combine the best ideas in new products much more quickly and efficiently.
An empty luxury mall is a much more beautiful sight than the long soviet bread lines for many reasons. You can almost smell the new scent of material private property exchange acquisition half way around the world. The mobility of capital and labor is greater than its ever been (more so in the recent past in some areas and less so in others but generally hugely more so). It’s a much better position to be in today as an austrian when the big argument is no longer socialism versus capitalism but the relatively finer points of free trade versus interventionism.
Austrian ideas have a much better chance of penetrating fiat currency welfare states than they do of penetrating communist regimes, especially when they are getting materially richer. The intelectual contradictions of socialist fallacy are riper than ever for exposure. One should take much of the Statist western worlds criticisms of China with an equal amount of optimism to the degree they are opposed to the State interests of the west. For how long ago was it that individuals of the west pushed beyond State guild restrictions in pursuit of profit that raises the living standards of all through trade?
I went to Beijing and Tianjin in 2002. There were half-finished concrete buildings everywhere, the skeletal remains of failures of government planning. At the time, there was no private ownership of land which might have changed since then.
But standing out like huge sore thumbs were billboards advertising “Home Office Internet” and “Telecomuting”. This is how I realized that China would not be going back to the Cultural Revolution any time soon.
Someone working from home cannot be effectively controlled. An internet connection means they can trade their labor anywhere at any time. If the garment workers union thought the competition from home sewing machines was bad, they ain’t seen nothing yet.
But their currency is fiat, the industries, banks, and all educational institutions are government run. They are building on a bubble, and it will burst, but the flexibility to recover quickly might still not exist when it happens.
And yes, so far internally they have not enforced copyright. But that is coming, especially with their membership in the WTO.
Personally I think the Bush administration repudiation of Taiwan was a mistake. But oh well, it’s not like I have any more control over the actions of my own government than one citizen of China does.
The Supermalls I see in Shanghai appear mostly to be doing a thriving business, some pulling in 50,000+ visitors a day I’m informed.
I don’t think what we are seeing in China is a bubble, though there are certainly some areas of malinvestment such as in real estate.
The real economic driving force is coming from small to medium businesses which are rapidly improving their operations, in almost free market conditions.
If the Government leaves things as they are, amazing advances are ahead. The copyright and patent issues will become a big issue. Currently businesses have all the latest software on everyone’s desktop. This is producing millions of highly tech enabled people.
With the world of business changing to adjust to new models incorporating new technologies, I would not be surprised to see Chinese companies playing a leading role. Media and advertising industries, for example, could be in for a big shake up in coming years.
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