Copy Chinese way of living: iLIVE
South Africa has one of the lowest savings rates in the world. We are a country that consumes all that it makes. We also are a country with high levels of indebtedness; we live way better than we should, on much more than we should.
If we consume more than we make, where does the balance of what we consume come from? China.
China is the world's greatest exporter, but not the world's greatest importer.
China also has one of the world's highest savings levels, sometimes at 50% of GDP. This means Chinese live on half of what they make, letting the rest of the world consume the rest of what they make.
The Chinese live on way less than they should and it has made all the difference. What this means, and this is for every country that trades with China, is that there is no way trade with China could be in anyone's favour but China - until the whole country changes its habits.
China has been guilty of devaluing its currency to keep its products competitive, but many argue that this has little effect on the trade surplus it has accumulated.
What may be referred to as China's abuse of labour - meaning cheap labour - seems to have been a temporary sacrifice that has resulted in the lifting of the standards of living for many.
For a country with huge levels of savings, it seems the Chinese, in general, are not particularly extravagant people.
The Chinese have extended a long line of credit to many countries, including African countries, and herein lies the trap.
We will use the long line of Chinese credit to buy all that China has to offer, sinking even deeper into Chinese debt. More troubling, however, is the obvious fact that taking Chinese money makes us less capable of standing up to China for flooding our markets with cheap goods and taking our local industries out of business. Countries like the US, which thought there was no way any other country could win in trade, woke up one day with $3-trillion debt to China.
While the US is the biggest importer in the world, with Americans highly indebted and living way above their means, China proved to be the opposite and, with those strengths, shifted the balance of economic power.
The only way for South Africa to have the slightest possibility of a mutual trade relationship with China is to adopt the same national sacrifice, both in savings and in labour.