Tuesday, January 29, 2019

Andrew Sheng and Xiao Geng — When Will China Achieve Quality Growth?

"When will China achieve quality growth?" Loaded question. China has already achieved quality growth in comparison with pre-revolutionary days before Mao and in particular since the reforms of Deng. The question is really how quickly will China accelerate the rate of quality growth. There are tradeoffs to consider.

The challenge the Chinese leadership faces is improving both the economy and increasing the quality of life in China, while also maintaining government control of the commanding heights of the economy, which is necessary for socialism. 

Distribution and quality of life are central goals for socialism, while they are irrelevant for capitalism. Under capitalist regimes distribution has become seriously unequal and quality of life is declining owing to socialization of negative externality. 

The Chinese economy already suffers from both since liberalizing. Further liberalization is not necessarily the road to socialist success. The Chinese government must also maintain control of the commanding heights, although government control doesn't necessarily imply state ownership.

The author fall into the trap of saving causing investment, and if the Chinese leadership makes this mistake and buys into it, it's all over for Chinese socialism. In fact, one wonders if the saving causes investment fallacy is a capitalist ploy to ensure that the ownership class maintains control.

Project Syndicate
When Will China Achieve Quality Growth?
Andrew Sheng, Distinguished Fellow of the Asia Global Institute at the University of Hong Kong and a member of the UNEP Advisory Council on Sustainable Finance, former chairman of the Hong Kong Securities and Futures Commission, and currently an adjunct professor at Tsinghua University in Beijing. 

Xiao Geng, President of the Hong Kong Institution for International Finance, professor at Peking University HSBC Business School and at the University of Hong Kong's Faculty of Business and Economics

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