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China’s liberalization and structural reform drives growth

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Re: China’s liberalization and structural reform drives growth

#71

Post by nabla9 »

cltsang wrote: post #67
RavlaAlvar wrote: post #35

Also, we shouldn't forget that since the economic reform of 1978, China has adopted the policy of intentionally escalating wealth inequality. Please do not forget billions of worker/farmer in China still live in a third world condition, so that the upper 10% can live their bourgeois life.

So are you challenging trickle down economics? That's debatable. I believe at least at the early stage capitalism trickle down economics works. However, without proper checks and balance system, corruption brought by power and wealth does stop the trickle down effect. Therefore in China where corruption is an accepted norm, it's doomed to fail. That was not originally planned though. Maybe that's also why recently th…

> I believe at least at the early stage capitalism trickle down economics works.

What is the basis of your belief?

I hope you understand that there is no thing in economics called "trickle down economics" or "trickle-down theory". It was term invented by Will Rogers as a joke to mock tax reduction policies that benefit the rich. Conservative politicians and pundits adopted this non-existent theory meant to mock them and magically people started to believe that it's a real theory that exists.

Only evidence of tax cuts helping comes from tax cuts for the poor who spend the money and don't invest, thus increasing the economic activity. https://www.journals.uchicago.edu/doi/abs/10.1086/701424 Trickle down has no evidence or theory to support it.

There is related real concept called supply-side economics, but it's also widely discredited by economists, including those who worked for Reagan like Mankiw. I think only handful of economists support it today.

Re: China’s liberalization and structural reform drives growth

#72

Post by baybal2 »

China has a cheap and easy, but hard politically recipe for growth: let loose of some state companies, industries and instantly record a net benefit from increased productivity.

And China still has lots and lots of state companies to put on the market, so they are nowhere near the end of the runway. The problem is that all what is left is so much entrenched with vested interests, touching them is a political bloodbath.

Re: China’s liberalization and structural reform drives growth

#73

Post by INGELRII »

RavlaAlvar wrote: post #35

Also, we shouldn't forget that since the economic reform of 1978, China has adopted the policy of intentionally escalating wealth inequality. Please do not forget billions of worker/farmer in China still live in a third world condition, so that the upper 10% can live their bourgeois life.

China has achieved poverty reduction unparalleled in human history. In 1981 around 88% of the Chinese population lived in extreme poverty. It has now declined into 2%. This happened parallel to the extreme increase of inequality. China has experienced a modest decline in inequality since 2008 as the economic growth has hit into trouble. 2/3 of the world poverty reduction between 1990 and 2005 was because of China.

Increase of inequality can't have increased poverty, but maybe you argue that it could have been reduced even faster and China didn't break records fast enough.

Re: China’s liberalization and structural reform drives growth

#74

Post by indemnity »

lkrubner wrote: post #9
tomlockwood wrote: post #8

Earlier quoted context omitted.

That's an interesting perspective considering the US Economy hasn't broken 3% GDP growth per year since 2005.

I don’t think many people realize how long ago was the era when the USA was special. The USA economy grew faster than any other country for most of the period from 1848 to 1929. A huge gap opened up between the USA and the rest of the world. By 1929, the USA produced more steel than all of Europe combined. But the USA has not been the #1 fastest growing nation in any year since 1929.

When averaging it out over 150 years, the USA growth rate is ~2% p.a.

The USA's secret is managing to have stayed stable enough over that period, and having maintained that growth number.

No-one can sustain 8-10% indefinitely, once the "easy" growth (industrialization, infrastructure, education, urbanization) is in the bag.

Re: China’s liberalization and structural reform drives growth

#75

Post by aquadrop »

roenxi wrote: post #17
mastazi wrote: post #14

Earlier quoted context omitted.

> population of more than a billion people, the 3rd largest landmass > how they managed to fall so low There are countries with even larger landmass, and countries with roughly the same population, whose economies are doing worse than China, so I'm not convinced that landmass and population are fundamental requirements for economic prosperity. I should add that I'm not an economist in any shape or form and I'm happy…

> There are countries with even larger landmass Russia and Canada. I wouldn't want to call Canada an inhospitable frozen wasteland, but I'm happy to say that about Russia. I suppose on reflection China has a lot of deserts, but I suspect given the population difference that China has a massive edge on quality farmland. If you look at the wiki page for landmass [0] China actually has a startling abundance of land and…

And you'd be wrong saying that about Russia. Sure, most of the country landmass is located in pretty cold regions, but nobody lives there, most of population lives in european part with okish weather. And this part is still huge enough to have big agriculture landmass overall. It's like calling Denmark inhospitable frozen wasteland because of Greenland. Russia has much more arable and cultivated land than Canada even in percentage.

Re: China’s liberalization and structural reform drives growth

#76

Post by iliketosleep »

qd6pwu4 wrote: post #16
roenxi wrote: post #10

China has a population of more than a billion people, the 3rd largest landmass controlled by a single sovereign entity. The only question is how they managed to fall so low that they weren't a competitive superpower. It is entirely possible that we don't know what the reason for China's rise is over the short term. I wouldn't trust any article written in English to understand the ins and outs of China's special econo…

Your question is insightful. I think a major reason that China once fell so low is the Qing dynasty secluded itself from the outside world, and didn't catch up with the industrial revolution. So in 18xx-19xx, China was still an agricultural civilization and western countries have stepped into modern industrial form. And we know as to production efficiency, (non-modern) agriculture vs industry is like fist vs bombs. B…

1.4 billion educated people? China has made great progress in the area of education, but there is still a large percentage, especially from older generations and in rural areas, who never had any real educational opportunities (as you know, they were too busy fighting for survival).

Also, given that the current leadership is taking a very different path that that of Deng, why are you so optimistic that China's rise will continue? From my perspective, they seem to be alienating themselves once again, and straying from path to prosperity originally set by Deng.

Re: China’s liberalization and structural reform drives growth

#77

Post by ForHackernews »

adventured wrote: post #46
nine_k wrote: post #22

Earlier quoted context omitted.

There is exactly one country with a comparable populatuon, India. It's not doing exactly bad, too. The next largest country is USA, with roughly thee times smaller a population. Most countries with larger landmass have most of its landmass barely usable due to climate: Russia, Canada, Australia, Algeria. Most others from top 10 largest countries are doing OK: USA, India, Brazil. China has a unique combination of very…

> There is exactly one country with a comparable populatuon, India. It's not doing exactly bad, too. There are however several other large population nations. There's no reason for eg one billion to be a cut-off point or similar. There are only 14 nations with 100m or more people, a sufficiently rare group to look at the nations that fall within it. The parent's point: "I'm not convinced that landmass and population…

Being economically successful and being a global superpower are not the same thing. There are plenty of small wealthy nations today, but with the decline of colonialism there probably won't be any more global powers with small populations.

Re: China’s liberalization and structural reform drives growth

#78

Post by RavlaAlvar »

hungryhobo wrote: post #61
RavlaAlvar wrote: post #35

Also, we shouldn't forget that since the economic reform of 1978, China has adopted the policy of intentionally escalating wealth inequality. Please do not forget billions of worker/farmer in China still live in a third world condition, so that the upper 10% can live their bourgeois life.

The way you framed it is a bit disingenuous. The reasoning behind the policy is that the government recognizes that China back then severely lacked any modern industrious knowledge. In order to quickly catch up, China decided to pour all its resources into a couple provinces that either had existing industrious base left over from foreign occupation or had strategic locations. As well as sending the best people over…

I am not saying Deng's approach is bad. I am just trying say that we shouldn't forget that a huge truck of China GDP comes from the exploitation of the workers.

Now that the level of inequality has reached the moon, I am curious to see what they will do next. Especially in the age automation and increasing trade war tender, manufacturing WILL leave China. Many in the US blame the rise Trump on the lost blue collar jobs. Imagine the same situation in China, but with majority of population being blue collar worker.

Let's also not forget about corruption in China. It is true that elimination of porvery is an important goal set by the central state. But how the local official achieve their target KPI is abhorrent, e.g. forcing low income family out of the city, manipulate the definition of poverty etc.

Re: China’s liberalization and structural reform drives growth

#79

Post by newsgremlin »

cltsang wrote: post #67
RavlaAlvar wrote: post #35

Also, we shouldn't forget that since the economic reform of 1978, China has adopted the policy of intentionally escalating wealth inequality. Please do not forget billions of worker/farmer in China still live in a third world condition, so that the upper 10% can live their bourgeois life.

So are you challenging trickle down economics? That's debatable. I believe at least at the early stage capitalism trickle down economics works. However, without proper checks and balance system, corruption brought by power and wealth does stop the trickle down effect. Therefore in China where corruption is an accepted norm, it's doomed to fail. That was not originally planned though. Maybe that's also why recently th…

If the western economies were truly trickle down, the bucket at the top would be empty by now. However, the source of the trickle has become more sealed over time, and thus the inequality gap grows.

Re: China’s liberalization and structural reform drives growth

#80

Post by xxxpupugo »

roenxi wrote: post #10

China has a population of more than a billion people, the 3rd largest landmass controlled by a single sovereign entity. The only question is how they managed to fall so low that they weren't a competitive superpower. It is entirely possible that we don't know what the reason for China's rise is over the short term. I wouldn't trust any article written in English to understand the ins and outs of China's special econo…

The article mentions, China for the first part of 20th century, and before 1980s, isn't a stable country.

Qing government is overthrown at 1911, which follows by a loose governance of various warlords, and KMT merely reins the power to control them. Before stuff can get better, the Japanese invasion happens, drags China into even bigger misery well into 40s. Tens of millions people died in WWII. After WWII, the Chinese Civil War happens immediately between KMT and CCP, with CCP ascending to power after 4 years.

At this stage, China finally regains a strong central government as it usually does in its history. Unfortunately, Mao is an ideology fueled dictator, who knows nothing about economy development. So China missed the golden age of economy and technology development worldwide before 80s. When its leader finally comes to sense, the world is a far different place than they would want to admit, and China is way behind already and have so much to catch up.

After which, it does something right about itself. Cheap affordable, mass education offered to its populace. Student loan was unheard of in China (not sure it is still case nowadays). And freedom to do business is offered to its citizens, and they are encouraged to get rich by the party. CCP would like to claim all the credits, but in reality it is mix of everything, it does something right, but more like catalyst that starts something even beyond its own imagination, driven by the desire of one billion people to seek a more abundant life.

Yes, I think what really happens in China today is that it finally comes back at the world stage, not as a catch-up, but as a player, with its own pros and cons.

Such coming back should be regarded as the normal of the world order, but I guess it will have to earn the status before the rejection from the post cold war, western liberal order is significantly weakened or defeated.

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