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Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers

carnegieendowment.org

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Re: Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers

#61

Post by longcheng »

tonyedgecombe wrote: post #43
eksemplar wrote: post #4

I don’t get this article. China exceeded their economic growth target for 2018 in April when their economy hit 6.8% growth. Their wages are steadily increasing. Their internal market is the healthiest of any g20 economy. Investments both internally and internationally are up and their population has little dept. On top of that they haven’t touched retirement age, so they have a lot of leverage there.

I don't think anybody believes their growth figures any more.

I don't believe anyone's figure. I believe my eyes, and I see Made-in-China everywhere. I see US is freaking out and waging trade war.

Re: Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers

#62

Post by samspenc »

baybal2 wrote: post #7
shasheene wrote: post #5

As a non-expert, it seems likely that of the 3 options, wealth transfer will be the main solution to China's debt problems. (It's worth noting, China's high corporate debt levels are, like Japan's, owed to mainly to domestic creditors, and I believe also denominated in the local currency.) In a totalitarian dictatorship, "political opposition from so-called vested interests" is not that strong a barrier when politica…

There is no Zhu Rongji in current generation of party leaders. From my personal observations, the leeching of public debt through borderline fraudulent projects barely ceased under Xi. This is an elephant in the room. Only the moment they will lift a knife on it, will we be assured that they began an actual move on that front. Do you know why Xi raised his hand on his closest supporters in the reactionary camp he lea…

Thanks for your analysis. Just to clarify some of your points to readers who may not be that familiar with Chinese politics.

* Zhu Rongji is the more reformist leader in the late 1990s, and seen as one of the few leaders (maybe along with Zhao Ziyang in the 80s and Wen Jiabao in the 2000s) who may have been favorable for a move towards democracy in China.

* Bo and Co = Bo Xilai and ... Zhou Yongkang? They were arrested in 2012-2013 for plotting a coup against Xi and human rights abuses such as organ harvesting of prisoners of conscience, after a high-ranking security official (Wang Lijun) defected and sought refuge in the US consulate, providing inside dirt on these two party chiefs.

* Xi = Xi Jinping, current Chinese leader.

Re: Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers

#63

Post by ksec »

sseth wrote: post #55
Nokinside wrote: post #10

Unlike liberal democracies, Beijing has more room to act in crisis. China has extractive institutions that will ultimately be a growth limiting factor, but I don't see it limiting their crisis responses. * There will be no political gridlock between left and right that can be solved only with half measures. Decisions are done in small groups of 30 people at most, with several hundred people having some influence. * T…

There's a lot of truth in this. However, there is also the fact that their ability to keep the lid on things means they may also suppress feedback mechanisms which in a democracy may prevent wrong things from going on too long. Something like this has been seen in the one child policy which went too far and the government is now scrambling. Also, the clumsy attempts to prop up the stock exchanges a couple of years ag…

>However, there is also the fact that their ability to keep the lid on things means they may also suppress feedback mechanisms which in a democracy may prevent wrong things from going on too long

That is where surveillance and big data comes in.

And I am not too sure if they are scrambling at their one child policy, there are simply far too many people in china.

Re: Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers

#65

Post by pishpash »

Put differently, over the longer run, Beijing can only avoid a sharp rise in unemployment or stagnant wage growth to the extent that it has managed to achieve significant wealth transfers.

Isn't this exactly what the Communist Party or socialism (fake capitalism) with Chinese characteristics is supposed to have retained the option to do?

To be more specific, a charitable interpretation of affairs is that Xi or whoever is engineering Xi's policies has made sharp left turn, and is taking authoritarian measures to carry out exactly this.

Re: Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers

#66

Post by joeyo »

ksec wrote: post #63
sseth wrote: post #55

Earlier quoted context omitted.

There's a lot of truth in this. However, there is also the fact that their ability to keep the lid on things means they may also suppress feedback mechanisms which in a democracy may prevent wrong things from going on too long. Something like this has been seen in the one child policy which went too far and the government is now scrambling. Also, the clumsy attempts to prop up the stock exchanges a couple of years ag…

>However, there is also the fact that their ability to keep the lid on things means they may also suppress feedback mechanisms which in a democracy may prevent wrong things from going on too long That is where surveillance and big data comes in. And I am not too sure if they are scrambling at their one child policy, there are simply far too many people in china.

> And I am not too sure if they are scrambling at their one child policy, there are simply far too many people in china.

It's not the absolute number that's the issue it's the age distribution: https://en.wikipedia.org/wiki/Demographics_of_China#/media/F...

Re: Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers

#67

Post by pishpash »

PakG1 wrote: post #60
jessaustin wrote: post #40

Earlier quoted context omitted.

It has worked that way for several decades, but as you say, an authoritarian state can change direction quickly. There are some indications that Xi's ideology is very similar to Mao's: total domination of everything by the guy at the top. Will it be a surprise when everyone starts carrying around a little red smartphone?

The interesting thing is that Xi seems smarter and wiser than Mao ever was. Well, in matters of war, Mao was really smart, and hopefully, we'll never have to see Xi tested that way because if we do, it'll probably be during a world war. But in terms of economic decisions, I'd say he absolutely tops Mao. The question is whether there's any situation where he wins in the long run because the responsibility of running C…

I highly doubt Xi is smart in economics or whatever else, even compared to Mao, and he seems partly sincere in his belief in his methods, which raises some worries. One can argue whether Mao was really ideological or just supremely egotistical and corrupted by power. After all he was rather pragmatic in the beginning.

What is true though is that institutionally China is much smarter about economics and less ideological than in Mao's era, but that is predicated on retaining institutional norms and memory past Xi and his ostensibly tactical rollback. It could totally work out in a worse way.

Re: Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers

#68

Post by PeterisP »

ekianjo wrote: post #26
Nokinside wrote: post #10

Unlike liberal democracies, Beijing has more room to act in crisis. China has extractive institutions that will ultimately be a growth limiting factor, but I don't see it limiting their crisis responses. * There will be no political gridlock between left and right that can be solved only with half measures. Decisions are done in small groups of 30 people at most, with several hundred people having some influence. * T…

> It's all about being practical. The soviets and Mao's regimes had ample powers to do what they wanted, yet it resulted in mass murder and complete catastrophe at unprecedented scale because they made very, very poor decisions. Having leverage does not mean it fits prosperity nor crisis. Look at how soviets encouraged the killing of Kulaks which led to the great starvation (dozens of millions of deaths) in Ukraine i…

The examples you give are not examples of mistakes or unexpected outcomes. Regarding killing of kulaks, it's not like they wanted to achieve prosperity and the chosen measure failed; they intended to eliminate kulaks as a social class with loss of prosperity as an acceptable price to pay to get that outcome, and mostly succeeded in their goal. Regarding Holodomor, again, there's no mistake, the starvation was intentionally caused, having these millions of deaths was part of the goal ("the Sovietization of Ukraine, the destruction of the Ukrainian national idea, and the neutering of any Ukrainian challenge to Soviet Unity."), not an accidental side effect of agricultural policy choice. These are prime examples of harsh large scale practical actions that were reasonably effective in achieving political goals through mass murder among other means.

Effectiveness is about achieving goals, it's quite possible to be very effective while working towards evil goals.

Re: Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers

#69

Post by ksec »

baybal2 wrote: post #7
shasheene wrote: post #5

As a non-expert, it seems likely that of the 3 options, wealth transfer will be the main solution to China's debt problems. (It's worth noting, China's high corporate debt levels are, like Japan's, owed to mainly to domestic creditors, and I believe also denominated in the local currency.) In a totalitarian dictatorship, "political opposition from so-called vested interests" is not that strong a barrier when politica…

There is no Zhu Rongji in current generation of party leaders. From my personal observations, the leeching of public debt through borderline fraudulent projects barely ceased under Xi. This is an elephant in the room. Only the moment they will lift a knife on it, will we be assured that they began an actual move on that front. Do you know why Xi raised his hand on his closest supporters in the reactionary camp he lea…

Wang Qishan

Re: Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers

#70

Post by pishpash »

evilturnip wrote: post #38
Nokinside wrote: post #36

Earlier quoted context omitted.

Those are examples of ideological action. Chinese have not been strongly ideological after Deng Xiaoping. Communist party is more like ruling aristocracy with privileges. Communist party is using communism the same way as aristocracy used religion to justify their divine mandate.

Central decision makers generally cannot predict the outcomes of the decisions they make because the system is so complex. It's been proven time and time again that the distributed decisions of millions of individual actors ala a non-centralized economy results in a more efficient and non-catastrophic outcome. Wherever recent history has gone awry is when a few powerful people think they know what's best for everyone…

An interesting line of thought. Some writers have suggested that the failure of centralization in prior eras was due to a poor state of information availability. If you consider why things like the Great Leap Forward continued till it became a catastrophe, one big reason was because politicians in locales made up good numbers for political reasons. As long as humans have been involved, this and other more technological barriers (as in the case of the USSR) have presented insurmountable challenge, but things are certainly moving in a direction that makes centralized decision making less impractical.

Note, this is still not a suggestion to do it, for humanist reasons, which I think is mostly what the Western (cultural) objection has always been. But from a practical perspective, centralization (even totalitarianism) has been accepted as the norm in various smaller and non-governmental contexts that have also involved highly complex decision-making, e.g. the corporate employer. People seem to accept this level of de-individualization, and a strong evidentiary case has yet to be put forth that full decentralization of that relationship works out better over all.

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