A New’s Clip from NYT
Here is an interesting article in the news today about one of the secrets to China’s economy. For anyone who is interested in economics, politics or even just China, this article talks about how China-the second largest economy in the world in terms of GDP-still avoids doing business with anything but tangible currency.
To paint a picture of what this means, picture trying to pay for your college tuition upfront, in cash, with not bills larger than $10’s and $5’s. It would take your entire family to even carry that kind of money. I say 10s and 5s because China’s largest bill is roughly equivalent to $16(USD).
I am sure that the idea of dealing entirely in cash is repulsive to many–particularly in the United States–just based on how much we have profited from the use of credit, but I am intrigued. Credit has been a dark gift to the capitalist world. We have enjoyed expansion beyond our wildest dreams, as a direct result of the capacity for growth that credit has allowed us. It has, however, also brought us some of our darkest days-especially speaking as a part of today’s global economy. Of course, credit is not directly at fault for this, but it is the potential for disaster when dealing with lines of credit that was realized across Europe, the United States and then sent shockwaves to any economic partners of these actors.
Now, I am not suggesting that the whole world should follow China’s example and deal strictly in cash. That is not even a feasible possibility by this point. To do so would be fairly limiting, and possibly even unsustainable. Actually, thinking about China doing business in this way and limiting itself to such small bills provides interesting insight to the level of prudence of the Chinese government when it comes to economic matters, and could even partially explain the slow economic growth that has historically characterized Chinese economics. However, this is an interesting model of how a country can conduct so much business, both domestically and internationally, and still safeguard itself against the vulnerabilities of the global economy. It makes political sense that China would manage itself this way, as China has been progressively more interested in benefiting from the global capitalist economy, yet still “standoffish” or skeptical towards really being subject to it (for a multitude of reasons, not all economic).
Til Next Time…
Anyway, I just think this is an interesting article that tells something that, personally, I did not already know about China. It seems like an interesting piece of information to keep in mind when thinking about China’s economy, and when evaluating its political-economic decisions.
Feel free to comment with any and all thoughts or comments about the article! I hope you enjoyed it :] Til next time, cheers.