[drcode]

Here's my simplified way of thinking about it:

The Chinese government wants its citizens to be relatively poor. Why? because then it can use them as cheap labor that is a valuable tool to leverage on the world stage. Plus, poverty stifles political activism.

How does it keep its people poor? Well, by making sure a USD spent in China can buy 4x as much rice/milk/chicken/etc in China as it can in the US. This will mean income of Chinese workers and merchants will also remain low. How does it do this? By keeping the value of the yuan low, by direct manipulation of the currency, which it pays for by a high import tariff. (Which, again, makes Chinese people poorer by making things coming from outside the country very expensive.)

By using this strategy, the Chinese government uses its people as underpriced laborers that give it a huge export surplus and which it can use to influence world events, as well as to generate vast government capital (essentially capital it is withholding from its citizens) it can use to invest in foreign companies/governments.

(Of course now the picture is muddying somewhat because the extreme GDP growth is making many Chinese wealthy anyway, despite all these obstacles.)

[mathattack]

I don't see it this way. The policy of cheap exports is actually to keep their people employed. Whatever they would be doing if they weren't exporting would keep them poorer than what they're doing today.

In addition, the large amount of foreign debt holdings gives them a claim on future output (or land, or other capital) of other countries. That gives the county geopolitical strength.

[randomafrican]

Poorer and more idle people are also more dangerous.

[skue]

> Plus, poverty stifles political activism.

Do you have evidence to back that up? I can think of a number of examples to the contrary offhand: The French Revolution was preceded by a financial crisis and poverty, as was the rise of the Nazism in Germany. There's Mohamed Bouazizi, the poor and repressed fruit vendor who helped launch the Arab Spring in Tunisia. And even the Occupy and Tea Party movements that have each arisen in response to the economic situation within the US.

[klenwell]

One of the interesting points I heard made in discussion of the Arab Spring is that it's not the poor but more privileged classes that generally spark revolutions. Here's the Wall Street Journal on the subject (I think I originally heard the idea on NPR):

While the poor struggle to survive from day to day, disappointed middle-class people are much more likely to engage in political activism to get their way.

This dynamic was evident in the Arab Spring, where regime-changing uprisings were led by tens of thousands of relatively well-educated young people. Both Tunisia and Egypt had produced large numbers of college graduates over the past generation. But the authoritarian governments of Zine El Abidine Ben Ali and Hosni Mubarak were classic crony-capitalist regimes, in which economic opportunities depended heavily on political connections. Neither country, in any event, had grown fast enough economically to provide jobs for ever-larger cohorts of young people. The result was political revolution.

None of this is a new phenomenon. The French, Bolshevik and Chinese Revolutions were all led by discontented middle-class individuals, even if their ultimate course was later affected by peasants, workers and the poor.

http://online.wsj.com/news/articles/SB1000142412788732387390...

I think both Occupy and Tea Party movements fit this model. College kids mired in debt who can't find decent jobs. Aging white middle class conservatives watching the financial class run away with the lion's share of economic growth (while being led to believe that's it's being siphoned off by immigrants, welfare queens, and gay married couples).

Also brings to mind the old "Revolution to Conserve" idea I was introduced to back in AP American History:

http://en.wikipedia.org/wiki/Clinton_Rossiter

[skue]

There is a distinction between class and income. In all these examples, people are still responding to their economic situation.

[drcode]

Maslow's hierarchy of needs.

[efalcao]

No Godwin

[hencq]

It is simplified, but it is also wrong. If you're looking for a simplified explanation, the article doesn't do too bad a job. China has lifted over half a billion people out of poverty in the last 30 years. Dismissing that as a side effect of trying to "influence world events" is, frankly, preposterous.

[drcode]

Well, I think the Chinese people are the one who pulled themselves out of poverty, and they did this * in spite of * the government, not * because of * it.

[gameshot911]

>>By using this strategy, the Chinese government uses its people as underpriced laborers that give it a huge export surplus and which it can use to influence world events, as well as to generate vast government capital (essentially capital it is withholding from its citizens) it can use to invest in foreign companies/assets.

To what end? Let's say this is true, and let's also say that its strategy is successful. What is achieved if the end goal is not to better it's populace? And if it's goal is to better it's populace, why keep them down now at all and not immediately trying to improve the well-being of its citizens?

[randomafrican]

While i agree on the relatively poor part, i'm not so sure about this:

>>Plus, poverty stifles political activism.

It's very likely that the goalfor the Chinese government is to avoid being overthrown by keeping control on how much and how fast the citizen get richer. Keeping them relatively poor guarantees that investments in future growth and future employment keep up rather than turning too soon into a more mature economy that keeps up with domestic demand.

And there's some kind of political argument about equality and history that i would make if only i could manage to sort it out in my head first.