Spurred on by state media which have let rip at the "debt-riddled" United States, the Chinese have listened with wide-eyed amazement to tales of American people living well beyond their means.It's good on a personal level being thrifty, of course, but a very curious bipolar relationship opened up between the Chinese and the Americans over the last 30 years. The Chinese have an export-oriented economy now, whereas we have an import-oriented economy. They save, and invest in us rather than themselves: we spend and finance our budget deficits with their money. It works, for the moment, but only as long as everyone plays their role.
The US credit crisis has brought to light a fundamental difference between thrifty consumers in China -- the largest foreign holder of US debt -- and their credit-loving US counterparts.
After Standard & Poor's downgraded Washington's top notch credit rating this month, some Chinese have shown scorn for Americans they see as spending money before they earn it.
"They should just buy what they can pay for," said Zhao Kai, a Beijing resident, explaining that like many Chinese people he "prefers to pay cash and does not like being in debt".
According to Forbes magazine, the average Chinese household had debts worth just 17 percent of its annual income last year, against 136 percent in the United States.
If Americans just bought what we "can pay for", imports would collapse and the Chinese economy would be crushed. If the Chinese stopped investing here, interest rates would rise, and higher taxes would be necessary for us, but they'd suffer to from poor returns.
If the Chinese want to scold us, we can't stop them, but if we follow their advice, we'll all be in deep, deep trouble. So, we'll listen to them and smile, forget everything they say, and then head down to Best Buy later in the evening to buy new (Chinese) electronic toys. Because that's how the world works, these days, and there's hell to pay if we do it any differently.
No comments:
Post a Comment