Two quick observations on an excellent take. The first is that Taiwan resolutely avoided the Chinese approach, staying partially open the entire Covid period, with much more success than the West. Its example was ignored and could have been a better alternative to both the West and China. Second, a grave weakness of excessive leverage in…
Two quick observations on an excellent take. The first is that Taiwan resolutely avoided the Chinese approach, staying partially open the entire Covid period, with much more success than the West. Its example was ignored and could have been a better alternative to both the West and China. Second, a grave weakness of excessive leverage in an economic system is that it makes actors in that system extremely vulnerable to the inevitable occurrence of policy errors in an economic system. I agree that neither Pettis nor Posen has an adequate explanation for why 2023 has turned into a year of weakness and disappointment for the Chinese growth miracle. But, policy errors were bound to happen at some point. The Omicron variant, with the benefit of hindsight, dissolved a lot of the confidence of potential home purchasers in the infallibility of the Chinese government at a time when covid had disrupted the building rhythm of China's real estate industry separate from, and in addition to, the problems created by the Three Red Lines. Your take presents the arrival of the Omicron variant as one of China's Minsky Moments for its heavily leveraged real estate sector. I suspect that they are more likely to occur under Pettis' argument than under Posen's argument.
Two quick observations on an excellent take. The first is that Taiwan resolutely avoided the Chinese approach, staying partially open the entire Covid period, with much more success than the West. Its example was ignored and could have been a better alternative to both the West and China. Second, a grave weakness of excessive leverage in an economic system is that it makes actors in that system extremely vulnerable to the inevitable occurrence of policy errors in an economic system. I agree that neither Pettis nor Posen has an adequate explanation for why 2023 has turned into a year of weakness and disappointment for the Chinese growth miracle. But, policy errors were bound to happen at some point. The Omicron variant, with the benefit of hindsight, dissolved a lot of the confidence of potential home purchasers in the infallibility of the Chinese government at a time when covid had disrupted the building rhythm of China's real estate industry separate from, and in addition to, the problems created by the Three Red Lines. Your take presents the arrival of the Omicron variant as one of China's Minsky Moments for its heavily leveraged real estate sector. I suspect that they are more likely to occur under Pettis' argument than under Posen's argument.