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The Forum > Article Comments > The difficulty of reforming China's economy > Comments

The difficulty of reforming China's economy : Comments

By Simon Louie, published 11/11/2014

The Chinese state directed economic model, in which investment has taken a huge role is nearing the end of its useful life.

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Nowhere else in the world, can you get 35 years of average 10% growth!
But as you rightly pointed out, it was state directed growth, free of the handbrake of privatization and the inevitable anchor of dividend earning unproductive parasites, who as seen elsewhere, add nothing except their unearned profit demands.
Its useful life is ending?
You know this how?
All the profits of state owned enterprise is always plowed back into the economy!
And the entirely unproductive parasite class is missing out, except as property investors, which is the only reason property prices are soaring.
Perhaps if all residential property was limited to personal residency only; the entirely unproductive parasites would be forced to invest elsewhere much more productive, like entrepreneurial small business and truly productive private/cooperative enterprise?
The overheated housing market could then perhaps return to some semblance of normality?
And doable where the state makes all the rules!
Moreover, I like what I see as an inflexible anti corruption stance in the new administration, no longer setting government above the law of the land; the real reason for the most toxic corruption!?
Rhrosty.
Posted by Rhrosty, Tuesday, 11 November 2014 11:28:17 AM
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LOL Rhosty

You do know the following bit of Chinese history:

--Growth took off when Deng Xiaoping dialed back the power of the Chinese state and made room for private initiatives

--Large inefficient and corrupt state owned enterprises are actually considered a break on the economy.

--The collective wealth of the National Peoples Congress in China makes US congressmen and senators look like paupers. They're all getting their rake-off

I could go on but this'll do for a start
Posted by stevenlmeyer, Tuesday, 11 November 2014 1:44:42 PM
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I think this is something of interest to China watchers.

Almost Half of China's Rich Want to Emigrate

http://www.businessweek.com/articles/2014-09-15/almost-half-of-chinas-rich-want-to-emigrate

>>About half of China’s wealthy are considering moving to a new country within five years, says a just-released report by U.K.-based bank Barclays. The survey of more than 2,000 individuals around the world, all with personal wealth over $1.5 million, showed Chinese are more eager to emigrate than the very well-off in any other region.>>

And

90% Of China’s Super-Rich Want To Send Children Abroad

http://www.ibtimes.com/90-china%E2%80%99s-super-rich-want-send-children-abroad-434838

>>An overwhelming majority of China's wealthiest want to send their children to foreign universities, and the United States is their first choice. Ninety percent of the country's richest people have plans to send their children abroad to study, according to independent research by China's Industrial Bank Co. and the Hurun Report.>>
Posted by stevenlmeyer, Tuesday, 11 November 2014 2:08:36 PM
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The Western economies are a basket case and we are giving lectures about the need for China to reform ?

China's big secret even with all the corruption and inefficiencies is their multitude of Govt owned banks which can create their own money free from our central banking parasites.
Posted by Arjay, Tuesday, 11 November 2014 4:21:51 PM
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The major reforms China needs are all political not economic.

There are some economic reforms which China would benefit from, such as floating the currency. But it's relatively unimportant – unlike Russia's "shock therapy" (which was done quickly because they wanted to halt the Rouble's collapse ASAP) the Yuan's not in danger of collapse and may even be overvalued.

As for rebalancing, the inane solution in this article would be deeply counterproductive. The GFC resulted in a decline in consumer spending. China responded in the most sensible way possible: by increasing government spending to compensate. Even what gets labelled "malinvestment" is better than nothing, but China was making plenty of more productive investments as well.

Increasing consumer spending is the result of consumers having more disposable income. Insufficient consumer spending is NOT the result of too much government spending or too much business investment. Likewise a decline in the amount of business investment is the result of a perception that it will be more difficult to make a profit – nothing to do with excessive government spending.

If there's a real estate bubble, the best thing China can do is warn people about it. The second best thing they can do is threaten to tax it. The third best thing they can do is to actually tax it. But what they definitely shouldn't do is allow fear of it to provoke policies which will damage the rest of the economy.
Posted by Aidan, Tuesday, 11 November 2014 5:34:37 PM
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Major reforms China needs are all political, not economic, as Aidan said, and this is why the difficulty is made still greater.

As Mr. Brian Hennessy seemed to imply in his "Reading the tea-leaves in China, 18 May 2013," those who can afford to leave for or send their children to the United States, Canada, Australia, etc. are perhaps leaving the sinking ship.

Gigantic is the national characteristic with China, past, present and future. The elites had gigantic political power; gigantic wealth accrued to it; they gigantically abused and exploited a gigantic number of masses, whose suffering was gigantic; the gigantic schism needed a gigantic propaganda:
The trouble with China is that the people themselves do not believe anything but gigantic lies.

One gigantic trouble with Chinese immigrants or residents is that they are such a monumentally proud people that they do not observe "Do in Rome as Romans do," but act and behave like "the Chinese standard ought to be the global standard" wherever they are.
Posted by Michi, Thursday, 20 November 2014 12:32:46 AM
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