Why China Won't Slow Down
Why China Won’t Slow Down
(reponse to Michael Pettis)
In Michael’s article and in the comments I detect a number of assumptions which, taken together, might be addressed to open this debate a little wider.
1. The Chinese economy is slowing. No, it’s growing faster than ever, adding $690 billion to GDP this year and more in 2014. Those are all-time records. The rate of acceleration is irrelevant; it’s the increase in gross dollar production per capita that feeds the bulldog.
Those 1.3 billion bulldogs are being better fed, clothed, housed, and transported every year. Given the stable population and controlled inflation, this represents a truly enormous improvement in the overall operating efficiency of the Civilization State. For all its faults, the government there is able to get the country moving in profitable directions, a feat which few Western governments will even attempt these days. The government has adequate political and financial capital to reach its 5- and 10-year goals and to make whatever adjustments necessary to stay on schedule.[Martin Jacques’ term ‘Civilization State’ is an accurate summation. My conversations with Chinese have convinced me that they’re the biggest critics/whiners on earth when it comes to governance (we Americans are meekly accepting by comparison) and at the same time they somehow know how to cooperate on a macro level that produces amazing results. They’ve been doing this for millennia under far worse governments than the current regime. And for decades now they’ve given 80+% trust and support to that government. Then they resume whining, presumably].
2. That China is overspending on infrastructure. China will have overspent on infrastructure when its infrastructure is 20% better in all respects than Germany’s. Until that day, the Chinese people will continue to whine while congratulating themselves as they board the Beijing–Berlin Express.
3. That economies cannot be managed and must experience the boom-bust cycles of Capitalism. Economies CAN be managed, as we’ve seen for the past 40 years. But, as the Chinese constantly point out, there’s no point in trying to implement a Chinese “model” without a Chinese civilization to implement it. Given that, we might profitably study aspects of Chinese governance, like only electing geniuses to their highest ranks. Then leaving them alone to make the best-informed decisions so that the country’s goals can be accomplished.
4. That the Chinese Government should view ‘profit’ as our governments view it. (“No amount of infrastructure efficiency increases can raise productivity without this freedom to profit.”). They don’t. They’re Communists. They see profits as stemming from the entire nation and being a harvestable, macro-manageable crop which must benefit the entire nation. Oddly enough, a lot of Chinese capitalists agree.