Monday, January 6, 2014

Shanghai's History a Tale of Successful Capitalism

Richard Ebeling emails:
I have a new article on the news and commentary website, "EpicTimes," on "Shanghai's History a Tale of Successful Capitalism."

Those impressed with China's recent modernization, epitomized by the new and futuristic skyscraper skyline of Shanghai, usually don't know that before the Second World War Shanghai was already China's commercial, industrial and cultural capital.

This was made possible because before the war Shanghai's International Settlement was run as an almost independent "city-state" that followed a policy of virtually laissez-faire capitalism under which individual rights and private property were respected, free trade was practiced, and civil liberties were secure for all, Western residents and Chinese alike.

Shanghai was a shining example of how a system and policy of individual liberty and free enterprise can provide a life of security and prosperity for all. It is a lesson that would be well to learn today, when so much of the world lives on corrupt political regimes of "legal plunder" and collectivist ethics and ideas.
RW note: Although Shanghai has a fascinating history, as Richard details, at the present time Shanghai like all of China is caught up in a manipulated boom that is a combination of massive money printing by China's central bank and central planning of much construction. This manipulation will ultimately lead to a crash and it will be blamed on the free markets that Richard reports on. However, it will not be the free markets activities that will result i the crash, but the the government manipulations.

For a Chinese related stock to short in anticipation of the crash, see the EPJ Daily Alert.

1 comment:

  1. China's 'Tobin Tax' debate stings City hopes for offshore trading boom
    Any such move could greatly complicate the City of London’s plans to become the top market for global trading of the yuan or renminbi

    Britain’s bid to become a global hub for trading in Chinese assets has run into a major snag after a top Chinese official suggested a ‘Tobin Tax’, a levy on financial transactions to curb capital flows.

    Yi Gang, director of the State Administration of Foreign Exchange, called for an “in-depth study” of a Tobin tax, particularly on foreign exchange trades and flows of speculative hot money. SAFE is the world’s biggest fund, commanding the central bank’s $3.7 trillion in foreign reserves.

    Any such move could greatly complicate the City of London’s plans to become the top market for global trading of the yuan or renminbi, since the clear intention would be to reduce turnover and limit disruptive flows of capital.

    Mr Li, who is also deputy chief of China’s central bank, wrote in the Communist Party journal Qiushi that curbs may be needed to ensure an “orderly” transition as the country opens up its internal capital markets and moves towards a free float for the yuan.

    “Persistently guarding against cross-border liquidity flow shocks is the key to good foreign exchange management,” he wrote. While the article is not a formal proposal, his opinions are closely-monitored as a guide to future policy.

    The US-educated Mr Yi said last month that China should stop accumulating huge reserves, arguing that the exchange rate is near “equilibrium level”. He wants the yuan to be set by supply and demand, but this must be managed with great care.