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PRODUCTION, NOT CONSUMPTION, MUST REMAIN THE DRIVING FORCE OF PROSPERITY AND SECURITY|
As if with prescience, but actually, just by sheer coincidence, my thoughts on what the "China Dream" should be appeared very timely in the context of the large scale decline in the US stock market due to China's first quarter GDP growth being announced as a mere 7.7% instead of the 7.9% or 8.0% that the world expected. The S&P500 plummeted more than 2% in a single day (aided by the collapse of the gold market, due to an entirely different cause, i.e., the sale of some $6 billion dollars worth of gold by a major brokerage).
So, it is time for China to reflect upon what it has done, and done poorly, in the past 6 months, that led to this seeming death knell of the Chinese economy, as the world markets took it to be. A 7.7% annual growth rate of GDP is extremely good compared to other countries, but not when compared to the China of a year ago. And thus, it is time for China to find out what went wrong that was outside its control, and what went wrong that was within its control.
The recession in America and Europe was mostly out of China's control.
But the overvaluation of the Yuan, to the point that Chinese exports are handicapped by an exchange rate imposed politically on its human labor intensive economy that overvalues the purchasing power of the average paycheck, has resulted in China's worldwide decline in exports, and indirectly, in the loss of its foreign currency reserves as China has to pay out more dollars for every Yuan it receives from a foreign client.
If politicians are inept at defending the true exchange rate of the Yuan, fearing reprisals galore for standing up for the truth, then the solution is for such politicians to politely resign and tell their people, they are too soft to fight for their rights. Leaders must be tough for their people. They must be willing to take risks, suffer reverses, and sometimes, fight for their jobs even. But to secure one's job by avoiding challenging situations is not true leadership. It is the opposite of leadership. Time for China to wake up from its brief "China Dream" and instead roll up its sleeves and WORK HARD AGAIN to give the next generation the chance to have a better dream than they can afford today.