“Supply chains will shorten.” How? The existing supply chains are the result of the decisions of thousands of firms pursuing profits, not policy making. What’s the mechanism for translating the desires of policymakers into the decisions of Western business managers?
Enjoyed the article and look forward to the upcoming collaborations.
I would only add that with China, politics is seeped into the marrow and any structural change must be viewed through this lens. The Chinese authorities have shown themselves to be reactive to date - playing a huge game of whack-a-mole with the economy. In a political system where as a consequence of purges and anti-corruption drives bureaucrats are paralysed until orders are received from the very top, and even then action can be diluted, a huge sclerotic system does give much confidence.
On a similar note, as Pettis notes, the answers to the problems facing the Chinese economy are well known and have been discussed for many years. However implementing these changes have been too difficult, politically - as illustrated by the recent U-turn on property tax (many local officials own multiple properties so pushed back) - and in a system obsessed with control the idea of redistribution of economic power is unpalatable to Chinese authorities.
“It’s how Leninist systems operate: they think production and supply are everything …" Funny that a purportedly socialist system does not care if the revolutionary class of workers actually gets to ever consume anything. Make things for the sake of heroically setting new production targets, instead of having more and nicer stuff. Maybe that type of stern approach works when everyone is in the struggle together, but how do you get workers to buy-in when the business and government elite lives very pleasantly, right in their faces? Hopefully China will move to a more humane and sustainable model, where all that hard work leads to good things reaching more people. A peaceful, productive, happy China would be a blessing for all of us, not just the Chinese.
Russia is committing genocide in Ukraine but so is China with the Uyghur's. Why are companies and people doing business with them. They are as bad as Russia and, eventually, may do the same thing to Taiwan. David Kramer
I have for some time found it hard to reconcile the Michael Pettis' thesis on China with the figures Adam published a while back (2017?) on the findings of associates of Thomas Picketty on income levels for different segments of the Chinese population between 1978 and 2015, showing that pre-tax income for China's bottom 50% had risen by 401% over that period (the data compared China with the US and France over the same period). I am not saying Michael Pettis is 'wrong', but there is something contradictory here which seems to merit a more nuanced appreciation of the situation regarding questions of inequality, the development of a domestic consumer market and the growth of a 'middle class' in China. As an aside, while jibes about certain aspects of Chinese infrastructure development are easily made, we should also take note of such things as the more humble, but equally important development of decent road systems way out into the countryside, facilitating integration into regional and national markets, and the incredible cheapness of fares in Chinese public transportation systems. The latter seems to merit consideration in our definitions of Government 'welfare' spending. Having lived for 11 years in an admittedly very rich Chinese city, I find myself puzzled rather than convinced by many of the arguments put forward in these kinds of discussions.
“Supply chains will shorten.” How? The existing supply chains are the result of the decisions of thousands of firms pursuing profits, not policy making. What’s the mechanism for translating the desires of policymakers into the decisions of Western business managers?
Tax incentives?
Enjoyed the article and look forward to the upcoming collaborations.
I would only add that with China, politics is seeped into the marrow and any structural change must be viewed through this lens. The Chinese authorities have shown themselves to be reactive to date - playing a huge game of whack-a-mole with the economy. In a political system where as a consequence of purges and anti-corruption drives bureaucrats are paralysed until orders are received from the very top, and even then action can be diluted, a huge sclerotic system does give much confidence.
On a similar note, as Pettis notes, the answers to the problems facing the Chinese economy are well known and have been discussed for many years. However implementing these changes have been too difficult, politically - as illustrated by the recent U-turn on property tax (many local officials own multiple properties so pushed back) - and in a system obsessed with control the idea of redistribution of economic power is unpalatable to Chinese authorities.
“It’s how Leninist systems operate: they think production and supply are everything …" Funny that a purportedly socialist system does not care if the revolutionary class of workers actually gets to ever consume anything. Make things for the sake of heroically setting new production targets, instead of having more and nicer stuff. Maybe that type of stern approach works when everyone is in the struggle together, but how do you get workers to buy-in when the business and government elite lives very pleasantly, right in their faces? Hopefully China will move to a more humane and sustainable model, where all that hard work leads to good things reaching more people. A peaceful, productive, happy China would be a blessing for all of us, not just the Chinese.
Russia is committing genocide in Ukraine but so is China with the Uyghur's. Why are companies and people doing business with them. They are as bad as Russia and, eventually, may do the same thing to Taiwan. David Kramer
I have for some time found it hard to reconcile the Michael Pettis' thesis on China with the figures Adam published a while back (2017?) on the findings of associates of Thomas Picketty on income levels for different segments of the Chinese population between 1978 and 2015, showing that pre-tax income for China's bottom 50% had risen by 401% over that period (the data compared China with the US and France over the same period). I am not saying Michael Pettis is 'wrong', but there is something contradictory here which seems to merit a more nuanced appreciation of the situation regarding questions of inequality, the development of a domestic consumer market and the growth of a 'middle class' in China. As an aside, while jibes about certain aspects of Chinese infrastructure development are easily made, we should also take note of such things as the more humble, but equally important development of decent road systems way out into the countryside, facilitating integration into regional and national markets, and the incredible cheapness of fares in Chinese public transportation systems. The latter seems to merit consideration in our definitions of Government 'welfare' spending. Having lived for 11 years in an admittedly very rich Chinese city, I find myself puzzled rather than convinced by many of the arguments put forward in these kinds of discussions.
Curious about people's thoughts an option 6:
6. Replace bad investment with a massive increase in investment in education.
Great FT piece Adam. Can that link be publicly shared?