As incredible as it may
sound, China is losing its reputation for understanding money. If this
trend continues my Chinese friends can expect to be worse off
financially than the US will be in the coming decades. At least in
the United States, politicians do understand the real value money even though they
may be working hard to keep poor people from understanding that value.
Karl Marx and Adam Smith
understood that value and money were usually direct opposites as
delineated by their definitions. China has been found guilty by the
press of declaring the Yuan was worth more because housing property
prices in certain large cities have risen. Will it fall into the
same trap that the United States is leading its citizens into --
raising the minimum wage in order to make poor people think they are
earning more money -- while it's politicians actually know that poor
people will be earning less money because they will be getting paid
with money that is worth less! In China where theft and corruption
have been for so long unknown, this would be a double sin.
If we try to think of
money as a product that can be bought with an investment of labor
then this principle might be easier to understand. For example, if
one Yuan and one dollar can both be bought with one hour of labor,
then one Yuan and one dollar are both worth the exact same amount
because they are both selling for the same price. But if one
American dollar costs one hour of labor while 100 Yuan can be bought
for one hour of labor then the American dollar is worth 10 times as
much as the Yuan.
This scenario is made even
worse because when wealthy Chinese gentlemen begin investing in real
estate, they prefer for it to be located in the United States.
China recently reported
a greater share of overall wealth has shifted to the
middle-class -- thus closing the gap between China’s haves and its
have-not-yets. This is only alarming when we remember that wealthy
Chinese gentlemen prefer to invest in the prime real estate market located in the
United States. Consequently it doesn't matter what the real estate
situation look like in China, because the major players are playing
in the major markets, and that isn't even being measured in this
equation. Until it is measured China has no idea in the world how
much change has taken place between the haves and the have-not-yets
and should not risk reporting any financial data to anyone.
It was also reported that
less than 36% of China’s GDP comes from consumption, compared with
a global average of around 60%. To wean itself off its dangerous
debt addiction, China needs for its middle class to spend more
of the money it earns. "The government has been trying to
encourage that maximum expenditure for a while, but it hasn’t
worked."
It would be much more
reassuring if there was any indication that Chinese politicians were
just lying through their teeth, as our American politicians are when making similar statements.
Unfortunately the fervor of this declaration insists that Chinese
politicians are both deluded and sincere while American politicians
are only sincerely deluding US.
Wealth is not measured
accurately by how much an individual or a country is willing to
spend, but only by how much money is left over after the spending is
all over and done with. To put it another way, nations become rich
only by investing money, not by spending it, and certainly not by
borrowing it so that nation can spend more -- or to dole it out in
tokens of tribute as the United States does.
According to the National
Bureau of Statistics, by the end of the year 2013 personal mortgages
in China totaled 1.3 trillion Yuan. That is not the sign of a
healthy economy in China. That sign indicates China has bought a
foolish bill of goods from American politicians, just like US has.
Much better lessons in prosperity can be had by China from that small country
of Dubai.
