Is China attempting to choke imports?

Communism. Great in principle, appalling and ineffective in practice. Unless you are the Chinese government, that is. Whilst all other attempts at establishing a single-party, communist system have failed globally, leaving a weary public, destitute industrial base behind after continual fights between government and population, corruption and poverty, and eventually in the case of many […]

Communism. Great in principle, appalling and ineffective in practice.

Unless you are the Chinese government, that is.

Whilst all other attempts at establishing a single-party, communist system have failed globally, leaving a weary public, destitute industrial base behind after continual fights between government and population, corruption and poverty, and eventually in the case of many South American nations, anarchy, China has created its own, ultra-modern, effective version of communism which has rapidly turned over 500 million Chinese citizens in urban areas into wealthy industrialists and investors, and has instilled a level of order and obedience unrivaled anywhere.

The recent stock market turmoil which emanated from the Shanghai and Beijing trading venues could be looked upon as, rather than market forces and lack of interest in Chinese stock, a government move to depreciate stocks in Chinese companies on purpose, thus create an effect on the stock prices of Western companies whose supply chain relies on China could well be behind it.

China’s two exchanges are owned by the Chinese government, and the stocks listed on them are largely Chinese conglomerates, all of which have a minimum of 50% government ownership, thus the control is in the hands of the government.

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A visit to any large town or city in China, even relatively small towns like Zhengzhou, which has an urban population of over 8 million, many of whom have moved there within the last 10 years as in many provincial Chinese towns, will bestow amazement on even the most experienced Western businessman. Luxury cars, shopping malls selling the finest goods, and thousands of smartly-dressed urbane, sophisticated business people.

The products, whilst appearing to be Western, are indeed made under license in China to identical standards as the ones in their countries of origin. This is because China’s communist ethos frowns upon import and export, because that would mean daring to do business with the free market economies, so as a result, China knows that its people want wealth and prosperity, therefore maintaining a very clever system in which China buys rights to build products of Western origin in China under license, to supply only the domestic market.

As an example, the Buick GL8 depicted here, whilst appearing similar to General Motors’ luxury vehicles, is about as American as the Shaolin Temple.

This is a stroke of genius because it bolsters Chinese industry, and employs Chinese management, workers and suppliers, as well as gives the population what they want in terms of high standards of living without giving up control of industry and populace.

After a month of turbulance, imports to China, which are a very small minority of Chinese consumer goods, are at a very low level as a direct result of the effect on the trade surplus that the stock market volatility had.

China’s government not only controls the entire industry in the country as well as owns all of the banks, and strictly monitors the population’s commercial behavior, but it also has a highly advanced system which works out on a real time basis all transactions being made, therefore can tell with milimetric precision what action it can take to stem foreign imports whilst at the same time creating huge buying power to increase stakes in publicly listed overseas companies by buying their stock in bulk following a crash in prices.

If a correlation between these two circumstances is indeed valid, China could be marked out as the most astute and business-savvy nation on earth.

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