With the continuing drop in the Chinese stock market which the Chinese authorities are apparently unable to stop and the attendant drop in world stock markets, there has been a flood of articles on the Chinese economy, of varying quality. There were two I found particularly interesting I wanted to share with you.
The first is an op-ed in the Boston Globe in which the author takes the position that the “Chinese model” of economic growth is reaching its end:
China’s growth model is one in which the role of the state in the economy has become more intrusive. For years, many US observers hailed China’s government-led and investment-heavy model as a pillar of strength. Their favorite comparison is between the spunky new airports in Beijing and Shanghai and the supposedly dilapidated New York JFK and Los Angeles airports. While comparison has an element of convenience to it — you have to depart from a US airport and arrive at a Chinese airport when you visit China — the “airportology’’ is flawed, because it doesn’t take into account that China has clearly overbuilt, and at a considerable cost to its middle class.
According to the author the greatest benenficiaries of this model have been Western consumers. I think I’d say that the greatest beneficiaries were party officials and people living in countries that have supplied the raw materials for China’s over-production, e.g. Brazil, Canada, Australia, Russia. We’ll probably be working through the distortions created by the misallocation of resources for decades.
The other article is an editorial in The Telegraph. See how things look from the other side of the pond:
Paradoxically, the immediate impact of the Chinese slowdown could be mildly stimulative for the UK, in that it is fuelling a further collapse in energy and commodity prices. This will increase the amount of disposable income households have to spend, thereby helping to sustain Britain’s consumer-led recovery. Turmoil in financial markets may also further delay the point at which the Bank of England feels obliged to start raising interest rates.
Read the whole thing.
China has had an authoritarian government in some form for most of its history, and this is not compatible with free-market capitalism. What is interesting is that the free-market capitalists do not have a problem overlooking this little inconvenient fact.
China does not necessarily play by the same rules. As Mao taught us, one can use a gun to obtain and maintain power. What is interesting is that the anti-war, anti-gun, peace-loving Left do not have a problem overlooking this little inconvenient fact.
There are some here in the U. S.—Tom Friedman is a good example—who have a sort of tropism towards totalitarianism. They’re attracted to it the way a flower is to the sun.
I can’t remember who said it but such people always imagine themselves running a totalitarian regime rather than living under one.
Everyone always thinks they’re going to get to sit at the cool kids table – until lunch period on the first day of class. Most get over it, but some spend the rest of their lives plotting revenge.