...Parts of the paper are pretty math and statistics heavy, but the point is that the structure of the Chinese economy has resulted in upstream monopoly pricing power by SOEs, and this explains why their profitability over the past decade has been increasing rather than decreasing, as one would expect. Monopoly pricing, of course, means that profitability does not arise from greater efficiency but rather from the implicit ability to tax households, and unfortunately rebalancing requires that among other things we undermine the ability of SOEs to remain profitable.
Why is this important? It may be important in part because it means that characteristics of the Chinese economy that force up the savings rate by transferring wealth from the household sector to the state sector are so deeply embedded in the economy that those of us who continue to be very pessimistic about the ease with which China can transition to a consumption-led economy may very well be right. This would certainly help explain why the economy has gone backwards, not forwards, in the seven years since Beijing has promised with increasing urgency to reverse the imbalances.Read it at China Financial Markets
Debating growth in China
by Michael Pettis
That doesn't sound too different from what's been happening in the the good old USA with financialization. Maybe state capture and economic rent are features of Chimerica.