Economics and China

[kandrathe]

Are we on the precipice of another global economic meltdown, or is this a natural correction to China's inability to sustain 10% growth? There have been some interesting moves by China to un-peg it's currency, which seems to me to have destabilized the global economy.

You may recall, a few years ago I groused about how China manipulated it's economy by artificially setting the value of the yuan. It resulted in a flood of capitalization into China, and spurred their meteoric economic rise over the past decade. I tend to believe in the Newtonian principles of cause and effect, whereas some great boon usually comes at some great cost, although in markets and global economic activity there is not a strict zero sum proposition. There is no free lunch, but sometimes we do seem to get an economic miracle of loaves and fishes when we can formulate win-win-win scenarios for 2 parties and the commons. The vast increase in the consumption of global resources, for example, has benefited the Chinese people and driven world economic growth, but may have long term ecological and economic consequences in the form of pollution, and resource shortages.

Then again, is it fair for only the US and Europe to be resources consumers while the remainder of the world suffers in poverty (defined by lack of consumption)? No, of course not. True leadership (lacking), in the US and abroad, would be positioning our economies to thrive while moving away from non-renewable resources (e.g. petroleum, metal, rare earth, etc). And, we should be planning for intense recycling of certain critical materials (Periodic Table: Mo, Cu, Ni, W, Ti, Co, Re, Pt, RE, Nb, In). Otherwise, like peak oil, we will hit peaks for other important commodities shortly.

What are your thoughts?