The CCP most likely has a stronger plan than the U.S. and they also have the ability to execute it. From the recent WSJ article, China’s Stimulus Spurs U.S. Business, it would appear that China is beginning to regain its footing. This will be a major help to the world economy and it amazes me how quickly they have acted. The U.S could definitely learn from this. How long has it been since we started to hear about the Recession/Depression and yet we still have only had flashes of a rebound?

There is always opportunity and a lot of times a hardships are the best opportunity for a business to restructure both here and abroad. If the cheap money in China has really led to overcapacity, then there are a multitude of opportunities to perform consulting on optimal business strategies and to work for foreign firms to assist them in getting their strategies and investments in order.

A quote from the World Bank Report:
“China has important short, medium, and long term challenges. The key short term challenge is to limit the adverse consequences of the downturn for employment and people’s livelihood. The medium and long term challenges are enshrined in the 11th Five Year Plan (5YP) that is now in the fourth year of implementation. The key medium term challenge is to rebalance the pattern of growth to make it more sustainable economically, socially, and environmentally (see our December Quarterly for a discussion and possible policies-page 13 and Box 3). The key long term challenge is to continue with reforms to raise productivity and living standards. The World Bank’s report on a mid term evaluation of progress in implementing the 5YP recently concluded that “significant progress has been made toward several of the major objectives of the 11th 5YP, but important challenges remain.”

Do we have a 5 year plan? Something longer? And, if we do how often do we adhere to it and succeed in the majority of outlined goals? China has the benefit of long-standing, relatively consistent ruling party. We definitely do not, so it makes a certain sense that our government functions on a truncated timeline.

During this recession our shortsightedness means pumping tremendous amounts of cash into our economy. But, China is too you say! To date, on what have we spent the largest portion of American tax-payer dollars? Buying under performing financial assets and shoring-up the banks who wrote those securities. Does that sound like a sustainable business model? Would you willingly “invest” you own money along the same lines? No, because the key to investing is future returns and growth.

China’s and the CCP’s response to this recession looks more like true investing to me. They’ve spent money on infrastructure, eduction, and securing (not always successfully) foreign natural resources. I can safely say those assets will see returns in the future, certainly more than mortgages in default and the “securities” derived from them.

Anything in your macro-econ course that touches on these points?

To show you how important growth is to China, you aptly point out that even at 6.5 percent growth, the CCP will offer a 600 billion dollar stimulus package. Unbelievable. Their economy is still growing by a respectable rate and they want to super charge it even more!

Their time to pull the poor into the middle class is short, so they know they must move quickly and make it happen, or social instability will likely hit, which I would argue is bad for all of us — Chinese, the US and other.

Not all agree and they argue that social instability would be a good overall thing in China, but I personally don’t see how or get it. I don’t consider myself to be a CCP fan, but when I ask people, “if the CCP gets tossed and there is chaos in China, what happens and how will things function, and in a way that does not destroy our own US economy?”, I have not yet received a good answer to that question when I ask it of the cheerleaders for a quick and heavy handed revolution and overthrow in China.

My own feeling is that if instability hits there on a mass scale, it will not be pretty for anybody to watch and/or try to get that genie back in the bottle.

Though I haven’t done the amount of research that Scotty has, the point that sticks out in my mind the most is the savings rate in China in comparison to ours. HOLY COW! They are above the 50% mark while we can’t even muster up a positive number? That has to say something about how the current economic state is taking a much greater toll on the United States than it is on China.

This reminds me of a saying that my great-grandpa use to say “Take care of your pennies and your dollars will take care of themselves.” Now, I’m not saying that we should all start clipping coupons and purchasing expired meat to save a nickel, but perhaps rather than buying a 58 inch plasma screen TV when you have a 52 inch sitting at home in perfect condition, you pocket that extra cash to save for a rainy day. Looks like it might be storming for awhile.

What’s interesting is the amount that China relies on the U.S. to buy the goods they manufacture. Our spending has decreased significantly, which trickles back to China.

I think we all came into this program in hopes of furthering our careers and pay. Raquel and I were talking to a bartender a few weeks ago who had applicants with Master’s and Doctoral degrees. The manager at a local gym was turning people of the same education away for front desk jobs!

Will the one year MBAers be forced to take lower paying jobs than most of us had before we went back to school…?