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Political Risks May Foil Economic Reform in China
Keywords:
The risks that China could be stuck in middle income status- plateauing similiar to countries like Mexico in middle income status- grow as China's remains stuck in a state enterprises driven model of growth at the expense of consumers and savers. Japan reached the level of development China is in today in 1970, Taiwan in 1980 and South Korea in 1990. Progress from now on depends on innovation and developing a more open society as shown in the experience of Japan and South Korea, which requires a shift away from most bank lending and funding investment going to state owned enterprises and towards private enterprises and tech startups. The resulting overbuilding has led to a vast misallocation of resources and starving new private enterprises of the large amounts of capital needed. Porter describes the lower level of rural education which has not kept up with the pace of improvement in urban schools, and which poses problems for the future, including a shortage of skilled workers.
China's pathway to economic progress for investment and consumer spending different from that in Japan, South Korea and Taiwan
08/25/2015
Porter of the NYT cites experts who point to the high investment rates of 50% and lower household consumer spending of 35% as very different from the 35% for investment and 50% for consumer spending that happened when Japan, Tawan and South Korea got to the level of development where China is in 2015. A large part of this is because of the state driven model pursued by the Communist Party in China that puts investment by state run enterprises ahead of consumers and savers.
Grouped Articles
Political Risks May Foil Economic Reform in China
New York Times 08/25/2015
The Problem With China’s Economic Growth
WSJ 07/17/2017
China's future and the experience of Japan and Mexico
05/29/2010
China devotes 3% of GDP to education compared to 5% in developed countries. The underinvestment in education and human capital can lead to stagnation in per capita incomes. This happened in Mexico. The inability to deal with bad loans in the banking system can lead to slowing economic growth. This happened in Japan. The bulldozing of schools of migrant workers reflects a failure to address balanced growth and a breakdown in assigning the right priorities.
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Mexico and China look to trade away old rivalry - The Washington Post
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China's Silver Linings Playbook
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U.S. Stocks Shrug at China's Woes
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The Slowing of Two Economic Giants
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Unrest May Signal New Phase in China Economy
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Former World Bank chief Zoellick on the need for productivity improvements and investment in human capital for emerging markets in 2013-2023
09/12/2013
India, S. Africa, Brazil China, Indonesia, Mexico, Turkey and other emerging markets need productivity improvements and investment in human capital as growth slows in emerging markets in 2013. The crisis is particularly acute in India.
Grouped Articles
How Emerging Markets Can Get Their Mojo Back
Wall Street Journal 09/12/2013
Chinaâs Economy, Back on Track
New York Times 10/04/2013
China Think Tank Offers Reform Wish List
Wall Street Journal 10/30/2013
Wall Street Journal 11/04/2013
Investors Flee Developing Countries
Wall Street Journal 01/24/2014
Turkish Intervention Fails to Stem Lira Sell-Off
Wall Street Journal 01/24/2014
China's efforts to transition to a new model for development in 2016-2017, based on consumers and not on heavy state spending
08/25/2015
Xi-Jinping and Li Keqiang face a challenge and choices not unlike the one facing Deng Xiaoping in the 1980's- now the challenge is how to move China beyond the middle income status it has achieved with all its accompanying problems of environmental destruction, corruption and aging population.
Linked Articles
Economist 01/23/2016
Political Risks May Foil Economic Reform in China
New York Times 08/25/2015
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