If you’re a long-time reader of The Glittering Eye, there’s nothing in Michael Schulman’s Bloomberg View op-ed, “China Has World’s Biggest Productivity Problem”, that you won’t have read here:
China, like other economies in Asia, is facing the consequences of its past success. The region’s economies achieved eye-popping growth rates by tossing their poor and primarily agrarian workers into industry and global supply chains. That unleashed a torrent of productivity gains, as peasant farmers started making everything from teddy bears to iPhones.
In other words, China propelled its rapid development by shifting underutilized labor and capital into a modern capitalist economy.
Maybe somebody living in China will have more authority to say it.
I quibble with his prescription a bit:
Of course, what China really requires is the sort of free-market reform that the current leaders in Beijing have been so reluctant to implement. The state needs to allow market forces to allocate money and talent to the country’s most competitive and productive industries and companies.
I don’t think that greater producer efficiencies are the key to China’s future growth. I think that the Chinese authorities need to stop subsidizing exports (done in any number of ways), weed out corruption (mostly theirs), let wages grow, and rely on domestic private consumption much, much more for economic growth. Magic 8-Ball says “Outlook not so good”.
