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China must avoid Europe's mistakes

By Liu Min, Huang Shengang, Yao Yujie (Xinhua)

07:35, November 23, 2011

Edited and translated by People's Daily Online

The financial services industry has grown rapidly in Europe over the past half century, which has led to the massive outsourcing of manufacturing jobs and the hollowing out of the continent's real economy. This background of the European debt crisis has made it impossible for debt-laden European countries to gain strength from their real economy.

China, known as the world's factory, is also experiencing similar problems in certain regions and industries. A case in point is the debt crisis facing many enterprises in Wenzhou, Zhejiang province.

The "Wenzhou debt crisis" appeared on the surface to be caused by usurious loan practices but was actually caused by the hollowing out of the local real economy. A survey found that the three reasons for the hollowing out include local business people's desire for the huge quick profits from loan-sharking and property speculation, relatively great difficulties for manufacturers and a herd instinct.

Experts noted that China should give top priority to eliminating institutional obstacles that hinder the development of its manufacturing industry, driving speculative money out of the real estate market and increasing the investment in real economy, particularly in the manufacturing industry.

Europe is busy lowering its social welfare level, but China needs to compensate "historical debts" of its social welfare urgently

"The crisis has revealed disadvantages of the high-level social welfare, and therefore, Europe may start lowering its social welfare level," A researcher from the Chinese Academy of Social Sciences Tian Dewen said, "But one reason for Europe's long-term stability and economic development is also the high-level social welfare."

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Canada at 2011-11-2370.36.49.*
Long term it would seem advisable that China should develop its own state manufacturing for China"s consumer market. Perhaps clothes, other areas where there is often an unwanted surplus, could be left to Western corporations, [so they bear the loss of unsold clothing] although it would be good if China had its own fashion industry & designers. I hope China develops a State health care & social welfare system. It"s also cheaper than paying profit on top of cost.

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