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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

#111

Post by justicezyx »

samspenc wrote: post #62
baybal2 wrote: post #7

Earlier quoted context omitted.

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 arrest…

Not sure how zhu was viewed as more possible for democracy.

Note that what he did was the most brutal form of autocratic policy making, by forcing unemployment of millions of workers who are not trained to live in a different system; was possible because of autocratic government; and his policy pretty much made the rich out of the ranks of former government officials just like what happened to the Russian oligarchs.

I am guessing the rich do know how to court the expectations from inside and outside. And I often hear praises from Chinese people to zhu, while at the same time none of them suffer during zhu's policies...

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

#112

Post by schuke »

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…

But the Soviet Union and other dictatorships had similar institutions yet they all mess up somehow...

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

#113

Post by fellellor »

schuke wrote: post #112
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…

But the Soviet Union and other dictatorships had similar institutions yet they all mess up somehow...

By OP's argument, the Soviets had ideology which supposedly limited their actions. The Chinese on the other hand are truly faithless.

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

#114

Post by RachelF »

village-idiot wrote: post #6
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’m no economist, but I think the point is that they’re collecting debt at a high rate too. If they continue to grow faster than that debt, all is well. Once their growth starts to revert to the G20 mean, they’ll need to change their strategies dramatically. But I’m not an economist.

Yes, the debt needs to be used productively. Otherwise you borrow to build things that do not generate enough return to pay back the debt.

You also inflate asset bubbles, some Chinese property is as expensive as Silicon Valley or NYC, per square foot.

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

#115

Post by beambot »

dang wrote: post #98
beambot wrote: post #91

Earlier quoted context omitted.

I'm usually 100% in agreement when you chastise inappropriate behavior on HN, but this parent comment, with links to supporting evidence, was extremely informative to me -- even moreso than GP. How is such a reply nationalistic? Ideological? (Though I acknowledge that it's a newish account... So I put much more credibility on the linked content. Anyway, you deal with this BS way more than anyone else, so major hat ti…

It's been a while since I posted a longer explanation of what we're doing when we do this, so maybe one would be helpful. The core issue is the word primarily . It's one thing to occasionally comment on the politicized topics that naturally come up on HN. That's what most users do and it's fine. But there's a different class of account that exists primarily to do this, pushing a political or ideological or national a…

Amazing response, dang. Thank you so much for the explanation.

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

#116

Post by seanmcdirmid »

fspeech wrote: post #110
seanmcdirmid wrote: post #107

Earlier quoted context omitted.

Not all large Chinese techs are even listed, let alone abroad. Huawei being a big one.

Right I forgot Huawei, which only adds to the evidence that stock market isn't the only mechanism for building capital.

Why...yes, rumor has it there is always the PLA :).

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

#117

Post by monort »

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…

The second point about dismissing markets was actually the downfall of many authoritarian governments. You can't defy the law of economics with executive orders.

At the moment, China is only strengthening private property rights, looks like they learned that lesson.

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

#118

Post by forapurpose »

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…

> Unlike liberal democracies, Beijing has more room to act in crisis.

I strongly disagree; the above is an old shibboleth of dictators and other anti-democrats. Mussolini promised to make the train runs on time.

Authoritarian governments are actually starkly limited by the individuals with power - by their ability, their vision, their own greed and interests, and their political limitations (authoritarian power structures are not democracies; the limits are not voters and law but other power bases). When those leaders are incapable, the country fails - rule of man, not rule of law and by the people. In a democracy, the pluralism in people and inputs creates great flexibility: This especially applies to vision, a reason market economies, which factor in the vision of all, work so much better than command economies, limited to the cognitive processing of a few; it's the reason why micromanaging CEOs fail while delegating and empowering ones are so much more successful. Democracies are much more innovative politically and economically.

More generally, when one person can't do it, in a democracy others can; either others in the broad power structure do it, or the people in power are replaced. IMHO, that exact problem explains the lack of dynamism in authoritarian government, and the reason by imperial China fell so far behind the 'West' - when the emperor failed to adapt, the country was stuck with him (and his progeny) for another century. In a democracy, he'd be gone within months or at worst a few years.

Finally, corruption is an enormous problem and impediment in non-democracies, a fact long-established in Chinese histories. (IIRC, in Chinese histories the standard model of the long-term political cycle is the ascendancy of a new power, then its decline due to corruption, then chaos, then it repeats.) Policy is not driven by serving the voters, a necessity in democracies, but by those in power serving themselves.

Finally, reality does not bear out the strong-man theory: Without question the best performing economies historically are liberal democracies. China remains - and many believe will remain without liberal democracy - a poor country compared with the liberal democracies. Everything the Chinese dictatorship does well economically, from monetary policy to market capitalism to universal education, are innovations of liberal democracies. The most economically successful parts of China, Taiwan and Hong Kong, are liberal democracies (speaking very broadly about Hong Kong - the complexities there are out of scope in this comment).

(This is not a knock on the people of China. I dream of the day they will be set free to run their own lives - it's hard to imagine the innovation of a billion people set free with those incredible cultural resources at their disposal.)

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

#119

Post by simonh »

fspeech wrote: post #110
seanmcdirmid wrote: post #107

Earlier quoted context omitted.

Not all large Chinese techs are even listed, let alone abroad. Huawei being a big one.

Right I forgot Huawei, which only adds to the evidence that stock market isn't the only mechanism for building capital.

You are quite right, the Chinese stock market is relatively small compared to the size of the economy, which is why it’s wild swings and their cack handed managment of it has done limited damage. The point is that just having enormous powers of executive action is no guarantee that action is going to be effective or even competently executed. Their mismanagement of the markets was just a case in point.

Eventually the Chinese government is going to face a real, full bore economic crisis. Hopefully that’s a long way off and they will learn many lessons before then.

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

#120

Post by conanbatt »

fellellor wrote: post #113
schuke wrote: post #112

Earlier quoted context omitted.

But the Soviet Union and other dictatorships had similar institutions yet they all mess up somehow...

By OP's argument, the Soviets had ideology which supposedly limited their actions. The Chinese on the other hand are truly faithless.

The soviets were restrained? oh my..
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