The recent turmoil in the stock market did not spare Asia and China. As the economy in the United States and Europe declines, it also has an impact on China’s exports. The depreciation of the U.S. debt results in China’s foreign exchange reserves shrinking as well. All these dependencies illustrate that it is unreasonable for the “patriotic angry youth” in China to rejoice and gloat when they see other people’s misery. Nowadays, the economic integration and correlation of the world is very high. That kind of selfish policy of the Chinese government will ultimately harm China itself as well. We often hear the politicians singing this high-pitched tune, yet in fact they do not necessarily recognize the truth. Especially these politicians and the so-called economic experts in China do not see the interdependence.
The average people sometimes also have this way of thinking: do not you think what we gain is what they lose? But this is a closed, original way of thinking, which does not represent the facts. The current situation is exactly reversed. As the U.S. economy slipped into recession, China’s economy fell into recession as well. It is a lose-lose situation, rather than a shift as you gain on the advantages of other’s misfortune. Therefore the so-called “China Model” is really harming the others and at the same time harming the Chinese.
So what is the so-called economy? Many people interpret it as money. This interpretation is wrong. For each individual family or business, economic success means making money. This is because money is the intermediary between production and consumption. Using a scholars’ more obscure term, it is an equivalent. Put bluntly, money moves in the opposite direction of commodities in the market, thus facilitating the exchange of other commodities.
So, when we say the money in your home represents your wealth, it is not necessarily representing wealth in a country or the market. For example, when the currency is devaluating, money in your pocket remains the same, but with less wealth. An even more extreme situation is when the economy collapses or when the government invalidates its currency; then all the money in your pocket is of no use. Such things have happened in the world many times. Even in the last century in China it occurred more than once. When the economy collapses, the government has to replace it with new currency. Old money that did not get changed can only be kept as a historical heritage. Maybe after a few hundred years it could be sold as antiques.
So what represents wealth and what is the economy in a state, or society, or the market? That is the consumption. Only the consumed material wealth is the real wealth. Money represents wealth only when the economy has a normal operation. People who want to consume wealth must have money to buy consumer goods in the market. In order to make money, it is necessary to produce consumer goods. Money and consumer goods move in the opposite direction, which is the market economy.