One reason China hit the slowdown at an earlier stage surely is due to its sheer size. Japan was 100 million or so. SK, Taiwan, fractions of that. All relied on exports driven to grow fast.
But you need a large external market for that, and the larger the ROW is relative to you the longer you can extend that period. That's probably why Singapore can do it indefinitely, and China hits a wall at circa 35% of US GDP. Because ROW relative to China is much smaller, compared to Taiwan, Japan, SK.
A slowing China will feel less safe making any concessions to their economic growth, whether for climate change or American jobs. But they'll also have less leverage to throw around with others.
So, a stagnant China would be harder to agree new deals with, but easier to organize coalitions against.
A stagnant China is probably also more nervous both about provoking crises and about being seen to back down once the crisis starts.
So lower annual odds of a Taiwan crisis, but greater odds that China escalates any crisis with military action.
I think you're fundamentally misreading the internal political situation. Xi has unleashed hypernationalism and embraced a sort of "fascism-lite" emphasis on traditional roles of authority. Regardless of whether he actually needs it, he *thinks* he needs it to distract from slowing growth and growing internal challenges, and so he's doing it.
If Xi sees "not doing anything about Taiwan" as undermining his projection of strength to his domestic base, then he will *do something about Taiwan*, and as you say, he'll be loathe to be seen backing down.
The only saving grace is that I think he's more predisposed to staying with the "Hong Kong Strategy" that has so far worked well: (1) claim the mantle of anti-colonialism, (2) use soft power to change the 'facts on the ground' until it's feasible to take more concrete action, and (3) dare the West to overreact.
The problem with Taiwan is that it's already self-governing, and China doesn't have any international treaty like it did with the UK in HK by which it can legally intervene in Taiwan's domestic politics. AND, Xi's other actions in the SCS/ECS and newfound general bellicosity have turned TW's public opinion away from it.
Which all leads me to believe that unless Xi unexpectedly dies or loses his support (which he very well could if he makes a mess of Taiwan and the CCP turns on him), he's eventually going to force a crisis over TW.
What's even more dangerous is that any successor may be a true believer TW hawk. And failing that, even a generation from now, some future successor raised on Xi's hypernationalism may regard it as China's White Whale.
I just don't see any upside for Xi or any other Chinese leader in actually doing anything about Taiwan - the economies are too interconnected, and Taiwan itself is too stable and well armed for the kind of lightning campaign that Russia has used to influence facts on the ground faster than anyone can respond. Their best case scenario is a bloody war that wrecks the Chinese export economy and makes them an international pariah.
My view is that Taiwan will serves a similar role to climate change does in the rest of the world - It's politically useful to talk about, but no-one wants to be the dog that actually catches that car. So everyone announces plans close enough that they can claim to be serious about it, but just far enough out that they can get away with not doing anything concrete right now.
I think that the big concern for the PRC in the medium term is the rise of Taiwanese identity (I'm avoiding saying "nationalism" here) in Taiwan. Younger generations in Taiwan increasingly identify as Taiwanese and not as Chinese, which is also spilling over into politics, as the pan-blue vote ages and declines and there are starting to be parties that are even more pro-independence than the pan-green coalition. The fear is that at some point a Taiwanese election will be "independence now" vs "independence later" with the KMT / pan-blue coalition in third place.
I think the big fear of the PRC is that if they were to take over Taiwan now, then there is enough population that is Chinese that they might be able to gradually integrate it via "One Country Two Systems", but in a generation or two, they will face a united Taiwanese national identity that won't accept being Chinese, even if they keep democracy for a decade or two.
Note that even in the heyday of One Country Two Systems in Hong Kong, pro-independence parties were banned - but they were insignificant minor parties with negligible levels of support. The DPP is the biggest party in Taiwan and the President is a member. They can't ban that and have even a semblance of democracy.
So the PRC feels that it is under a ticking clock in Taiwan - if it doesn't act soon, then Taiwan will declare independence, which will force it to either invade immediately at a time of Taiwan's choosing (ie when the Taiwanese military is ready to resist), or to back down and effectively concede Taiwanese independence.
I agree politics matters more than economics when it comes to war.
Economics matters a little at the margin. Russia, for example, pushes hardest on the Ukraine when oil revenues are high (now, early 2014).
But Russia will always try to influence Ukraine, and China will always try to extort submission from Taiwan. I assume 10% chance of a Taiwan crisis in any given year under Xi.
Before the invention of representative democracy, there was an ongoing tension in government forms, between avoiding instability by having certainty in who the King was and making it hard to overthrow them, and avoiding the Bad King problem by making it easier to get rid.
Mostly countries moved towards government structures that were less reliant on the King to do everything, which at least meant that the passive/bad quadrant wasn't much of a problem (and the passive/good quadrant generally became the better kings than the active/good quadrant)
The solution is to build a mechanism for replacing the King that relies on a consensus that the King is bad and requires a consensus that a specific someone else is better. The best such mechanism humanity has found is democracy - note that formal opposition is much harder to co-opt into changing the rules than the oligarchy was for Xi. Even though China thought it had such a mechanism, the absence of a formal opposition meant that Xi has been able to undermine those mechanisms much more easily than Trump or even Orban.
The world does NOT understand the CCP ECONOMIC PRINCIPLES
People misread and misjudge the CCP ECONOMIC PRINCIPLES in their prognosis of doom for the Chinese economy – w.r.t the massive upliftment of 100s of millions out of abject poverty, drudgery and misery.
Take the example of the Chinese “Ghost Towns” and its impact on Bank NPAs
Let us assume that 30 million tons of steel,was used in the so called ghost towns,15 years ago.After 30 years, when these buildings are replaced,this will be steel scrap,and its price will be double the price.of prime steel today.The cement is a dead loss.
But let us dig deeper.Bao Steel may bill steel to a builder,at say,200 usd/ton,but the Marginal cost of that steel,might be 100 usd/ton.This is not enough.The Marginal COST To the steel cluster,in a communist nation would be 15-20 usd per ton,as the coal mines and steel factory,ports,rails,roads etc.,are already in place.The difference between the coal tarriff and the marginal cost of coal is a TRANSFER PAYMENT FROM Bao steel to the coal mine and ports etc (if Bao is buying Coal)
If Coal is selling at 50 usd/ton,the Marginal Cost would be 4-5 USD (being cost of power,diesel and cost of variable labour).
So the MARGINAL COST of the Ghost towns,would be 10-15% of the contracted value of the towns.
At that time,it was the RIGHT decision to set up these “ghost towns”,as the price of steel,coal,cement,paints,labour etc., was much lower,and so was their marginal cost.It made sense to lower the ENTIRE PRODUCTION cost of these plants, by MAXIMISING production, and then using the production,in so called GHOST TOWNS.The benefit of lowering the ENTIRE PRODUCTION cost of the steel,coal,cement plants,would be in the billions of USD.IF THE SAME INFRASTRUCTURE WERE TO BE SET UP AT TODAY’s PRICES OF steel,coal,cement,the cost WOULD BE MUCH HIGHER (far beyond the accrued Chinese Inter bank interest rates over the years)
As far as the banks who lent to the builders of these so called ghost towns – it is important to understand that the Banks have NOT funded the towns.The Banks have funded the input suppliers of these towns,id.est., the steel,cement,paints, furniture and appliances etc factories. In particular,the banks have implicitly funded,the profits of these input suppliers.
Then we calculate the employment provided to a mass of labour in these ghost town projects,and its attendant benefits and the management and technical expertise,developed by the builders,in these ghost town projects.
It must also be noted that the INCREMENTAL PROFITS earned by the steel,cement,paints,furniture and appliances etc. factories,as suppliers to the builders of the ghost towns – would have in the last 15 years,based on a ROCE of 20-30 % ,yielded an aggregate return of 1000-1500% to date (with the attendant revenue streams to the PRC,in the form of direct and indirect taxes,besides other incidental gains)
Hence,for a Communist nation,the Marginal Cost for the Cluster of the “Ghost Towns” (which includes the downstream supply chain benefits and the benefits to the state) is very low and MIGHT even be NEGATIVE,based on the Marginal Cost of the CLUSTER.
If the PRC calculates the incremental gains to the steel,cement,paints,furniture and appliances etc. factories,and their staff,over the past 15 years and the revenue earned by the state from this chain,over the last 15 years,the gains per se, could more than bail out the bank loans,to the so called ghost towns
IT MUST BE NOTED THAT THE LABOUR USED IN THE GHOST TOWNS,AND THE LABOUR USED (IN PART),IN THE INPUT SUPPLIERS, TO THESE GHOST TOWNS – would have had NO OTHER employment,were it NOT for the Ghost town projects. These millions of labour were introduced into the labour pool,ONLY due to these Ghost Towns.Of course,they would have inevitably entered into the labour pool – but only after 5-10 years (on such a large scale).
Hence,there is no loss to the PRC,on account of these so called “ghost towns”.dindooohindoo
'ghost town' term always make me smile, such a quick demonstration of ignorance. Most people in the west have no clue about the real nitty gritty of China.
Great piece. But I always wonder why everyone says that China pulling itself out of poverty was the most impressive case of poverty reduction, when Japan, Taiwan, and Korea were both earlier and did it faster. Is it just because China is 10x the population of Japan? I don't really see how China being 1.2B rather than 120M people makes the feat meaningfully more impressive.
Organizationally more difficult to come up with a coherent solution for that many people, but you get the economic advantages of a large single market. I think it also has to do with history; China was on its back foot when the IR kicked off, whereas Japan was riding high until, well, the thing where they ravaged much of China and then lost a World War. So there's a rebuilding (and a civil war) to be overcome then, too. Just my very lay guess.
I just really can't imagine 1B being meaningfully more or less difficult to organize than 100M. Both are just enormous numbers of people and I think any solution that scales to 100M probably also scales to 1B.
Re: "China was on its back foot when IR kicked off" - so I guess the later your country is the more impressive the feat? India is probably gonna be next in line to make the jump, so I guess they'll be the next "most impressive" case. It wouldn't surprise me if there is some recency bias regarding how people perceive these things too.
But yea, I agree with everything you said - I think scale is a big reason why people find it impressive. I just happen to doubt that scale is that much of a disadvantage. It'd be interesting to see if there's any correlation between the rate and earliness of industrialization and the size of countries.
Personally, I loathe our adversarial two-party "democracies". which eternally pits those who have money against those who don't. Hence Dems want to tax the rich in order to implement desirable social policies, eg, public infrastructure upgrades, free tertiary education, universal healthcare, etc; Repubs would rather limit government spending, because they are wealthy enough to look after themselves.
As far as China's development is concerned, it can longer rely on "stealing Western technology", because of the US desire to maintain global hegemony - and consequent US-enforced decoupling - means China will have to develop its own technology from now on.
I'm trying to introduce MMT to China; their consensus one party meritocracy would absolutely flourish with MMT, enabling them to overcome the present crippling contradictions in a market economy (eg if climate change is real, the market will simply not be able to deal with it. carbon taxes or not, because the trillions of dollars of stranded fossil assets will destroy global financial stability (make the GFC look like a picnic). China could transition to renewables ASAP; financing is NOT the problem for a currency-issuer , resource mobilization is the problem to be solved.
But China is advancing its super computer technology, the success or otherwise of which will determine the winner of the "competition" between the US and China. The ]democratic' West need not be paranoid at the prospect of China winning this competition, because the achievement of common prosperity is something the whole world desires; and China would welcome UNSC reform which eliminates a resource wasting and potentially disastrous nuclear arms race.
I hope the CCP can become less paranoid, and let people say what they think, while the CCP demonstrates the superiority of their "socialism with Chinese characteristics" system, to achieve
sustainable, rising living standards with "common prosperity"., something which is impossible for a competitive 'invisible hand' market economy to achieve by itself, without public sector intervention. The current Evergrande real estate disaster in China was entirely avoidable, with proper management of the private sector market. which the CCP patently failed to implement.
The CCP is still seduced by Western market ideology as their saviour, after 3 decades of "opening up" produced spectacular results by adopting free market processes....but now they need to be looking at the limitations of free markets.
It's funny, just a week ago I decided that I was thought it was very unlikely that China reaches the same per capita GDP as the UK at PPP and keeps it's current politcal system after reading 3 books in China in 3 weeks or so. The great wall of debt just describes textbook repression of creative descruction for the purpose of social stability and rent seeking, Acemoglu and Robinson style. Potentially more tellingly, China's AI dream in describing what it portays as a dynamic tech environment to me at least seems like a classic case of the ability to make money being determind by control of state power rather than innovative ability. Unfortuately I didn't make this prediction public, but I did text my friend doing a China studies degree my prediction (although I didn't put a precise probability on it.)
Out of curiosity, what were the 3 books (rather, what were the other two besides Great Wall of Debt)? Been looking for some good books about modern China/US-China relations
> Ever since I became an adult in 1980, I have been a stopped clock with respect to the Chinese economy. I have said--always--that Chinese supergrowth has at most ten more years to run, and more probably five or less. There will then, I have said, come a crash--in asset values and expectations if not in production and employment. After the crash, China will revert to the standard pattern of an emerging market economy without successful institutions that duplicate or somehow mimic those of the North Atlantic: its productivity rate will be little more than the 2%/year of emerging markets as a whole, catch-up and convergence to the North Atlantic growth-path norm will be slow if at all, and political risks that cause war, revolution, or merely economic stagnation rather than unexpected but very welcome booms will become the most likely sources of surprises.
> I was wrong for least twenty-five years straight--the jury is still out on the period since 2005. And that makes me very hesitant, now that a crash--even if, perhaps, not the crash I was predicting--is at hand, to count China and its supergrowth miracle out.
Sort of tangential, but I wonder if there are maybe world systems-adjacent theories for explaining the middle income trap. Do they top out, or is further growth suppressed because it can only occur relative to a ratio with the hegemon (e.g. US) -- that is, maybe the political factors exogenous to 'pure' economics could be explanatory?
You’re the first person I’ve seen who also recognizes that China’s heretofore successful containment of COVID is actually a risk rather than an advantage
I would expect that the breathless flurry of directives would have had a negative impact on economic growth. Largely shutting down significant fields like pop entertainment and private education services normally has a bad effect on the economy, at least temporarily. But I haven't seen anything on it. Maybe the statistics are deteriorating or maybe the effect is lost amidst the COVID issues and the oceanic transport delays.
Isn't coal-fired electricity a major driver of pollution in China? (And elsewhere ....) I suppose also the steel industry, but it must be largely driven by infrastructure and construction. So there could be a significant reduction in air pollution ahead, as a side-effect of cutting back on these.
One reason China hit the slowdown at an earlier stage surely is due to its sheer size. Japan was 100 million or so. SK, Taiwan, fractions of that. All relied on exports driven to grow fast.
But you need a large external market for that, and the larger the ROW is relative to you the longer you can extend that period. That's probably why Singapore can do it indefinitely, and China hits a wall at circa 35% of US GDP. Because ROW relative to China is much smaller, compared to Taiwan, Japan, SK.
Japan's growth plummeted after its crash, but Korea kept growing fast even after 1998.
Should we expect China in 20 years to have income up just 50% like post-89 Japan, or up 250% like post-98 Korea?
One billion people with average income of $21,000 is very different from one billion people with average income of $42,000.
Great read, Noah — keep it up!
Also curious what this means for US foreign policy.
A slowing China will feel less safe making any concessions to their economic growth, whether for climate change or American jobs. But they'll also have less leverage to throw around with others.
So, a stagnant China would be harder to agree new deals with, but easier to organize coalitions against.
A stagnant China is probably also more nervous both about provoking crises and about being seen to back down once the crisis starts.
So lower annual odds of a Taiwan crisis, but greater odds that China escalates any crisis with military action.
I think you're fundamentally misreading the internal political situation. Xi has unleashed hypernationalism and embraced a sort of "fascism-lite" emphasis on traditional roles of authority. Regardless of whether he actually needs it, he *thinks* he needs it to distract from slowing growth and growing internal challenges, and so he's doing it.
If Xi sees "not doing anything about Taiwan" as undermining his projection of strength to his domestic base, then he will *do something about Taiwan*, and as you say, he'll be loathe to be seen backing down.
The only saving grace is that I think he's more predisposed to staying with the "Hong Kong Strategy" that has so far worked well: (1) claim the mantle of anti-colonialism, (2) use soft power to change the 'facts on the ground' until it's feasible to take more concrete action, and (3) dare the West to overreact.
The problem with Taiwan is that it's already self-governing, and China doesn't have any international treaty like it did with the UK in HK by which it can legally intervene in Taiwan's domestic politics. AND, Xi's other actions in the SCS/ECS and newfound general bellicosity have turned TW's public opinion away from it.
Which all leads me to believe that unless Xi unexpectedly dies or loses his support (which he very well could if he makes a mess of Taiwan and the CCP turns on him), he's eventually going to force a crisis over TW.
What's even more dangerous is that any successor may be a true believer TW hawk. And failing that, even a generation from now, some future successor raised on Xi's hypernationalism may regard it as China's White Whale.
I just don't see any upside for Xi or any other Chinese leader in actually doing anything about Taiwan - the economies are too interconnected, and Taiwan itself is too stable and well armed for the kind of lightning campaign that Russia has used to influence facts on the ground faster than anyone can respond. Their best case scenario is a bloody war that wrecks the Chinese export economy and makes them an international pariah.
My view is that Taiwan will serves a similar role to climate change does in the rest of the world - It's politically useful to talk about, but no-one wants to be the dog that actually catches that car. So everyone announces plans close enough that they can claim to be serious about it, but just far enough out that they can get away with not doing anything concrete right now.
I think that the big concern for the PRC in the medium term is the rise of Taiwanese identity (I'm avoiding saying "nationalism" here) in Taiwan. Younger generations in Taiwan increasingly identify as Taiwanese and not as Chinese, which is also spilling over into politics, as the pan-blue vote ages and declines and there are starting to be parties that are even more pro-independence than the pan-green coalition. The fear is that at some point a Taiwanese election will be "independence now" vs "independence later" with the KMT / pan-blue coalition in third place.
I think the big fear of the PRC is that if they were to take over Taiwan now, then there is enough population that is Chinese that they might be able to gradually integrate it via "One Country Two Systems", but in a generation or two, they will face a united Taiwanese national identity that won't accept being Chinese, even if they keep democracy for a decade or two.
Note that even in the heyday of One Country Two Systems in Hong Kong, pro-independence parties were banned - but they were insignificant minor parties with negligible levels of support. The DPP is the biggest party in Taiwan and the President is a member. They can't ban that and have even a semblance of democracy.
So the PRC feels that it is under a ticking clock in Taiwan - if it doesn't act soon, then Taiwan will declare independence, which will force it to either invade immediately at a time of Taiwan's choosing (ie when the Taiwanese military is ready to resist), or to back down and effectively concede Taiwanese independence.
I agree politics matters more than economics when it comes to war.
Economics matters a little at the margin. Russia, for example, pushes hardest on the Ukraine when oil revenues are high (now, early 2014).
But Russia will always try to influence Ukraine, and China will always try to extort submission from Taiwan. I assume 10% chance of a Taiwan crisis in any given year under Xi.
Before the invention of representative democracy, there was an ongoing tension in government forms, between avoiding instability by having certainty in who the King was and making it hard to overthrow them, and avoiding the Bad King problem by making it easier to get rid.
Mostly countries moved towards government structures that were less reliant on the King to do everything, which at least meant that the passive/bad quadrant wasn't much of a problem (and the passive/good quadrant generally became the better kings than the active/good quadrant)
The solution is to build a mechanism for replacing the King that relies on a consensus that the King is bad and requires a consensus that a specific someone else is better. The best such mechanism humanity has found is democracy - note that formal opposition is much harder to co-opt into changing the rules than the oligarchy was for Xi. Even though China thought it had such a mechanism, the absence of a formal opposition meant that Xi has been able to undermine those mechanisms much more easily than Trump or even Orban.
The Chinese Real Estate is not an issue
The world does NOT understand the CCP ECONOMIC PRINCIPLES
People misread and misjudge the CCP ECONOMIC PRINCIPLES in their prognosis of doom for the Chinese economy – w.r.t the massive upliftment of 100s of millions out of abject poverty, drudgery and misery.
Take the example of the Chinese “Ghost Towns” and its impact on Bank NPAs
Let us assume that 30 million tons of steel,was used in the so called ghost towns,15 years ago.After 30 years, when these buildings are replaced,this will be steel scrap,and its price will be double the price.of prime steel today.The cement is a dead loss.
But let us dig deeper.Bao Steel may bill steel to a builder,at say,200 usd/ton,but the Marginal cost of that steel,might be 100 usd/ton.This is not enough.The Marginal COST To the steel cluster,in a communist nation would be 15-20 usd per ton,as the coal mines and steel factory,ports,rails,roads etc.,are already in place.The difference between the coal tarriff and the marginal cost of coal is a TRANSFER PAYMENT FROM Bao steel to the coal mine and ports etc (if Bao is buying Coal)
If Coal is selling at 50 usd/ton,the Marginal Cost would be 4-5 USD (being cost of power,diesel and cost of variable labour).
So the MARGINAL COST of the Ghost towns,would be 10-15% of the contracted value of the towns.
At that time,it was the RIGHT decision to set up these “ghost towns”,as the price of steel,coal,cement,paints,labour etc., was much lower,and so was their marginal cost.It made sense to lower the ENTIRE PRODUCTION cost of these plants, by MAXIMISING production, and then using the production,in so called GHOST TOWNS.The benefit of lowering the ENTIRE PRODUCTION cost of the steel,coal,cement plants,would be in the billions of USD.IF THE SAME INFRASTRUCTURE WERE TO BE SET UP AT TODAY’s PRICES OF steel,coal,cement,the cost WOULD BE MUCH HIGHER (far beyond the accrued Chinese Inter bank interest rates over the years)
As far as the banks who lent to the builders of these so called ghost towns – it is important to understand that the Banks have NOT funded the towns.The Banks have funded the input suppliers of these towns,id.est., the steel,cement,paints, furniture and appliances etc factories. In particular,the banks have implicitly funded,the profits of these input suppliers.
Then we calculate the employment provided to a mass of labour in these ghost town projects,and its attendant benefits and the management and technical expertise,developed by the builders,in these ghost town projects.
It must also be noted that the INCREMENTAL PROFITS earned by the steel,cement,paints,furniture and appliances etc. factories,as suppliers to the builders of the ghost towns – would have in the last 15 years,based on a ROCE of 20-30 % ,yielded an aggregate return of 1000-1500% to date (with the attendant revenue streams to the PRC,in the form of direct and indirect taxes,besides other incidental gains)
Hence,for a Communist nation,the Marginal Cost for the Cluster of the “Ghost Towns” (which includes the downstream supply chain benefits and the benefits to the state) is very low and MIGHT even be NEGATIVE,based on the Marginal Cost of the CLUSTER.
If the PRC calculates the incremental gains to the steel,cement,paints,furniture and appliances etc. factories,and their staff,over the past 15 years and the revenue earned by the state from this chain,over the last 15 years,the gains per se, could more than bail out the bank loans,to the so called ghost towns
IT MUST BE NOTED THAT THE LABOUR USED IN THE GHOST TOWNS,AND THE LABOUR USED (IN PART),IN THE INPUT SUPPLIERS, TO THESE GHOST TOWNS – would have had NO OTHER employment,were it NOT for the Ghost town projects. These millions of labour were introduced into the labour pool,ONLY due to these Ghost Towns.Of course,they would have inevitably entered into the labour pool – but only after 5-10 years (on such a large scale).
Hence,there is no loss to the PRC,on account of these so called “ghost towns”.dindooohindoo
'ghost town' term always make me smile, such a quick demonstration of ignorance. Most people in the west have no clue about the real nitty gritty of China.
Great piece. But I always wonder why everyone says that China pulling itself out of poverty was the most impressive case of poverty reduction, when Japan, Taiwan, and Korea were both earlier and did it faster. Is it just because China is 10x the population of Japan? I don't really see how China being 1.2B rather than 120M people makes the feat meaningfully more impressive.
Organise a party for 10 people. Then organise a party for 100 people.
Then let us know which one was harder to do.
As Napoleon said, quantity is a quality of its own.
Organizationally more difficult to come up with a coherent solution for that many people, but you get the economic advantages of a large single market. I think it also has to do with history; China was on its back foot when the IR kicked off, whereas Japan was riding high until, well, the thing where they ravaged much of China and then lost a World War. So there's a rebuilding (and a civil war) to be overcome then, too. Just my very lay guess.
I just really can't imagine 1B being meaningfully more or less difficult to organize than 100M. Both are just enormous numbers of people and I think any solution that scales to 100M probably also scales to 1B.
Re: "China was on its back foot when IR kicked off" - so I guess the later your country is the more impressive the feat? India is probably gonna be next in line to make the jump, so I guess they'll be the next "most impressive" case. It wouldn't surprise me if there is some recency bias regarding how people perceive these things too.
But yea, I agree with everything you said - I think scale is a big reason why people find it impressive. I just happen to doubt that scale is that much of a disadvantage. It'd be interesting to see if there's any correlation between the rate and earliness of industrialization and the size of countries.
Personally, I loathe our adversarial two-party "democracies". which eternally pits those who have money against those who don't. Hence Dems want to tax the rich in order to implement desirable social policies, eg, public infrastructure upgrades, free tertiary education, universal healthcare, etc; Repubs would rather limit government spending, because they are wealthy enough to look after themselves.
As far as China's development is concerned, it can longer rely on "stealing Western technology", because of the US desire to maintain global hegemony - and consequent US-enforced decoupling - means China will have to develop its own technology from now on.
I'm trying to introduce MMT to China; their consensus one party meritocracy would absolutely flourish with MMT, enabling them to overcome the present crippling contradictions in a market economy (eg if climate change is real, the market will simply not be able to deal with it. carbon taxes or not, because the trillions of dollars of stranded fossil assets will destroy global financial stability (make the GFC look like a picnic). China could transition to renewables ASAP; financing is NOT the problem for a currency-issuer , resource mobilization is the problem to be solved.
But China is advancing its super computer technology, the success or otherwise of which will determine the winner of the "competition" between the US and China. The ]democratic' West need not be paranoid at the prospect of China winning this competition, because the achievement of common prosperity is something the whole world desires; and China would welcome UNSC reform which eliminates a resource wasting and potentially disastrous nuclear arms race.
I hope the CCP can become less paranoid, and let people say what they think, while the CCP demonstrates the superiority of their "socialism with Chinese characteristics" system, to achieve
sustainable, rising living standards with "common prosperity"., something which is impossible for a competitive 'invisible hand' market economy to achieve by itself, without public sector intervention. The current Evergrande real estate disaster in China was entirely avoidable, with proper management of the private sector market. which the CCP patently failed to implement.
The CCP is still seduced by Western market ideology as their saviour, after 3 decades of "opening up" produced spectacular results by adopting free market processes....but now they need to be looking at the limitations of free markets.
What an absolute fever dream of a comment, thank you!
It's funny, just a week ago I decided that I was thought it was very unlikely that China reaches the same per capita GDP as the UK at PPP and keeps it's current politcal system after reading 3 books in China in 3 weeks or so. The great wall of debt just describes textbook repression of creative descruction for the purpose of social stability and rent seeking, Acemoglu and Robinson style. Potentially more tellingly, China's AI dream in describing what it portays as a dynamic tech environment to me at least seems like a classic case of the ability to make money being determind by control of state power rather than innovative ability. Unfortuately I didn't make this prediction public, but I did text my friend doing a China studies degree my prediction (although I didn't put a precise probability on it.)
Out of curiosity, what were the 3 books (rather, what were the other two besides Great Wall of Debt)? Been looking for some good books about modern China/US-China relations
Noah giving me Brad DeLong vibes (https://www.bradford-delong.com/2015/12/ever-since-i-became-an-adult-in-1980-i-have-been-a-stopped-clock-with-respect-to-the-chinese-economy-i-have-said-alw.html):
> Ever since I became an adult in 1980, I have been a stopped clock with respect to the Chinese economy. I have said--always--that Chinese supergrowth has at most ten more years to run, and more probably five or less. There will then, I have said, come a crash--in asset values and expectations if not in production and employment. After the crash, China will revert to the standard pattern of an emerging market economy without successful institutions that duplicate or somehow mimic those of the North Atlantic: its productivity rate will be little more than the 2%/year of emerging markets as a whole, catch-up and convergence to the North Atlantic growth-path norm will be slow if at all, and political risks that cause war, revolution, or merely economic stagnation rather than unexpected but very welcome booms will become the most likely sources of surprises.
> I was wrong for least twenty-five years straight--the jury is still out on the period since 2005. And that makes me very hesitant, now that a crash--even if, perhaps, not the crash I was predicting--is at hand, to count China and its supergrowth miracle out.
Sort of tangential, but I wonder if there are maybe world systems-adjacent theories for explaining the middle income trap. Do they top out, or is further growth suppressed because it can only occur relative to a ratio with the hegemon (e.g. US) -- that is, maybe the political factors exogenous to 'pure' economics could be explanatory?
You’re the first person I’ve seen who also recognizes that China’s heretofore successful containment of COVID is actually a risk rather than an advantage
I would expect that the breathless flurry of directives would have had a negative impact on economic growth. Largely shutting down significant fields like pop entertainment and private education services normally has a bad effect on the economy, at least temporarily. But I haven't seen anything on it. Maybe the statistics are deteriorating or maybe the effect is lost amidst the COVID issues and the oceanic transport delays.
Isn't coal-fired electricity a major driver of pollution in China? (And elsewhere ....) I suppose also the steel industry, but it must be largely driven by infrastructure and construction. So there could be a significant reduction in air pollution ahead, as a side-effect of cutting back on these.