PRAGOTI

The sustained and rapid growth of the Chinese economy in the last three decades has been in sharp contrast to the prolonged stagnation in most parts of the nonwestern world. The persistence of a mixed economic system despite market reforms further contradicts the orthodox doctrines of globalisation. This study argues that China’s economic transformation has been mainly based on productivity improvement and is thus to a significant extent a real development.

Over the past two decades, China emerged as the preeminent cheap labour platform to boost the flagging profit rates of corporations around the world. China, Japan and other Asian countries recycled their huge export earnings back into the US, keeping the value of their currencies low—a process that helped fund massive US trade and budget deficits. The influx of money enabled the US Federal Reserve to maintain a cheap credit policy, fuelling the housing bubble and debt-driven consumption in the US, which in turn maintained the market for Chinese goods.

Courtesy: www.wsws.org