The Real Reason China’s Economy Is In Crisis
When Tom Friedman at the New York Times praised the "China Model," I took it as a leading indicator that its economy would hit the wall in a decade or so. He was orgasmic over all those High-Speed Electric Trains! But after getting the State Run Railway to start building them, getting them to stop proved even harder. Now they're riding the High-Speed rail to nowhere. But what's an extra Trillion Dollars or so of debt? Certainly, the U.S. Congress would agree.
Similarly, getting them to stop building buildings (they could house half the planet) proved harder than convicting Donald Trump of something.
A centralized "Industrial Policy" can work well in the "catch-up" phase of economic development. If it proceeds too long -- which it almost always does -- it becomes the "ketchup phase," with lots of blood on the market floors as various bubbles burst.
In the 1980s I thought Japan's Ministry of International Trade and Industry (MITI -- 1949-2001, RIP) was going to prove me wrong until, quite suddenly, it didn't. Currently, Japan's stock market approaches the high set in...1989. And that's thanks to the capital fleeing China and looking for a home.
As a result of the Cultural Revolution, the CCP was on its back in 1980. That is a big reason why "Socialism with Chinese Crony-Capitalism Characteristics" could succeed as long as it did -- with a big helping hand from Walmart, Amazon, and Wall Street. Now that the Giant has awakened, they need to knock it over the head again if they want to get back on the growth track.
No comments:
Post a Comment