"China's authorities, however, have apparently chosen to continue the old strategy of dominating world markets by exploiting the country's cheap labor."
By WALDEN BELLO
"The world is investing too little," according to one prominent economist. "The current situation has its roots in a series of crises over the last decade that were caused by excessive investment, such as the Japanese asset bubble, the crises in Emerging Asia and Latin America, and most recently, the IT bubble. Investment has fallen off sharply since, with only very cautious recovery."
These are not the words of a Marxist economist describing the crisis of overproduction but those of Raghuram Rajan, the new chief economist of the International Monetary Fund (IMF). His analysis, now over a year old, continues to be accurate. Global overcapacity has made further investment simply unprofitable, which significantly dampens global economic growth. In Europe, for instance, GDP growth has averaged only 1.45% in the last few years. Global demand has not kept up with global productive capacity. And if countries are not investing in their economic futures, then growth will continue to stagnate and possibly lead to a global recession.
China and the United States, however, appear to be bucking the trend. But rather than signs of health, growth in these two economies-and their ever more symbiotic relationship with each other-may actually be indicators of crisis. The centrality of the United States to both global growth and global crisis is well known. What is new is China's critical role. Once regarded as the greatest achievement of this era of globalization, China's integration into the global economy is, according to an excellent analysis by political economist Ho-Fung Hung, emerging as a central cause of global capitalism's crisis of overproduction.1
Full story: China and the Crisis of Overproduction
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