Thursday, March 03, 2011

China is not just a brutal country of uncivilised barbarians it will probably be the cause for a worldwide disaster. The reason is the uncontrolled growth of its economy which is now second only to the US. Politicians the world over have been mesmerised by the dizzying speed of building. Thousands of miles of wide roads, huge dams, magnificent buildings, high speed rail, power stations, the numbers are mind blowing. Our politicians, including the world famous economist, want to achieve the same rate of growth as China with freeloading journalists applauding from the sidelines. No one is thinking of the consequences of unrestricted growth. Earth's resources are finite and as easily accessible minerals are exhausted companies will start exploring in remote and difficult terrain with the potential of destroying ecologically delicate areas. This is happening already as seen in the deal between BP and Rosneft of Russia to explore for oil in the Arctic sea. The more immediate consequence for this rush for growth is the rise in commodity prices. Prices of everything from oil to copper to cocoa are shooting up. How long before prices rise to such levels that no one will be able to afford the goods they produce? Around 20 years back gold was $ 260 an ounce whereas today it is $ 1430 an ounce. What does it say about the value of currencies? Sadly, for political reasons, no one mentions the one brilliant policy which somewhat mitigates the ill effects while contributing to China's growth and that is strict population control. Fall in the numbers of people will bring down demand and growth can continue with low inflation. As it is the world is heading for disaster.

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