as the Chinese see it (from EconLog):
–in manufacturing, they do mostly low-end assembly. They import high-tech components from Taiwan, Korea, and Japan, and do the final assembly to export. Their assembly facilities are often foreign-owned.
–Manufacturing employment is down since 1997, by about 20 million jobs. The gains in jobs have been in construction, retail and services. These are informal sectors, with no benefits, and often temporary work.
–At a local level, “government” consists of powerful party officials who are more interested in business than in public goods. They are outside the central government’s control, as exemplified by the fact that there are 100 gigawatts of “illegal” electric power plants in China, meaning plants not approved by the central government. (The entire nation of France uses 80 gigawatts of power. China uses 650 gigawatts.)
–China is “outsourcing” some forms of corporate governance and rules enforcement. WTO forces its companies and local governments to conform. The U.S. is forcing China’s factories to produce safer products. Listing their companies on foreign exchanges is forcing Chinese companies to be more transparent.
–China is adopting foreign institutions on a trial-and-error basis. It is authoritarian, but it is no longer centrally planned. In fact, the abandonment of socialism is quite harsh–education is no longer free, and the poor cannot afford it.
Income inequality is truly staggering in China and that can do nothing but exacerbate the problem.
