The Hairpin Bend

Forleden skrev jeg, at Kina praktiserede en ‘Hamid bin-strategi’, som på lang sigt ville medføre et mere demokratisk og liberalt styre. Jeg gik endda så vidt at proklamere, at det mest bekymrende med Kinas udvikling er, at det nærmest går for stærkt. Men alt dette kunne ikke være mere forkert. Kina følger hverken en ‘Hamad bin-strategi’ eller bevæger sig ufatteligt hurtigt fremad. Tværtimod. Faktisk er der - ligesom med myten om Marshallplanen - opstået en altomfavnende myte om Kinas kommende storhed og forrygende udvikling. Minxin Pei forklarer:

The only thing rising faster than China is the hype about China. In January, the People’s Republic’s gross domestic product (GDP) exceeded that of Britain and France, making China the world’s fourth-largest economy. In December, it was announced that China replaced the United States as the world’s largest exporter of technology goods. Many experts predict that the Chinese economy will be second only to the United States by 2020, and possibly surpass it by 2050.[...]And why shouldn’t they believe the hype? The record of China’s growth over the past two decades has proved pessimists wrong and optimists not optimistic enough. But before we all start learning Chinese and marveling at the accomplishments of the Chinese Communist Party, we might want to pause for a moment. Upon close examination, China’s record loses some of its luster. China’s economic performance since 1979, for example, is actually less impressive than that of its East Asian neighbors, such as Japan, South Korea, and Taiwan, during comparable periods of growth. Its banking system, which costs Beijing about 30 percent of annual GDP in bailouts, is saddled with nonperforming loans and is probably the most fragile in Asia. The comparison with India is especially striking. In six major industrial sectors (ranging from autos to telecom), from 1999 to 2003, Indian companies delivered rates of return on investment that were 80 to 200 percent higher than their Chinese counterparts. The often breathless conventional wisdom on China’s economic reform overlooks major flaws that render many predictions about China’s trajectory misleading, if not downright hazardous. [...]

After a quarter century of gradual economic reform, has China succeeded in transforming its old command economy into a genuine market economy? Not nearly as well as most people would guess. Although China was one of the earliest socialist economies to begin serious reform, recent data on the country’s regulation, international trade, fiscal policy, and legal structure place China in the bottom third of 127 countries surveyed for economic freedom, below most Eastern European countries, India and Mexico, and all of its East Asian neighbors, save Burma and Vietnam.

The Chinese state remains deeply entrenched in the economy. According to official data for 2003, the state directly accounted for 38 percent of the country’s GDP and employed 85 million people (about one third of the urban workforce). For its part, the formal private sector in urban areas employed only 67 million people. A research report by the financial firm UBS argues that the private sector in China accounts for no more than 30 percent of the economy. These figures are startling even for Asia, where there is a tradition of heavy state involvement in the economy. State-owned enterprises in most Asian countries contribute about 5 percent of GDP. In India, traditionally considered a socialist economy, state-owned firms generate less than 7 percent of GDP. [...]

An incestuous relationship between the state and major industries can doom developing countries, and China is more susceptible than most. The combination of authoritarian rule and the state’s economic dominance has bred a virulent form of crony capitalism, as the ruling elites convert their political power into economic wealth and privilege at the expense of equity and efficiency. The state’s economic dominance preserves systemic economic inefficiency as scarce resources are funneled to local elites and bureaucratic constituencies. The World Bank estimates that, between 1991 and 2000, almost a third of investment decisions in China were misguided. The Chinese central bank’s research shows that politically directed lending was responsible for 60 percent of bad bank loans in 2001–02. The problem persists today. Chinese economic planners revealed in early 2006 that 11 major capital-intensive manufacturing industries were overproducing. For example, the country’s steel industry, the world’s largest, has 116 million tons (or about 30 percent) of excess capacity.

State enterprises are also miserably unprofitable. In 2003, a boom year, their median rate of return on assets was a measly 1.5 percent. More than 35 percent of state enterprises lose money and 1 in 6 has more debts than assets. China is the only country in history to have simultaneously achieved record economic growth and a record number of nonperforming bank loans. [...]

China’s neo-Leninist regime has formidable resources—but much more serious defects. State-directed investment, made to secure the political loyalty of key constituencies and advance personal careers, will prevent China from realizing its economic potential. The corruption of the state will likely deepen. The deterioration of the public health infrastructure and education systems will generate social tensions and mass alienation, thus eroding the party’s base of support and increasing its vulnerability to the economic or political shocks that will inevitably come.

China has already paid a heavy price for the flaws of its political system and the corruption it has spawned. Its new leaders, though aware of the depth of the decay, are taking only modest steps to correct it. For the moment, China’s strong economic fundamentals and the boundless energy of its people have concealed and offset its poor governance, but they will carry China only so far. Someday soon, we will know whether such a flawed system can pass a stress test: a severe economic shock, political upheaval, a public health crisis, or an ecological catastrophe. China may be rising, but no one really knows whether it can fly.

Økonomen Tyler Cowen mener, at det er uundgåeligt, at der vil komme et “business cycle burp”, måske allerede inden for de næste 7 år, som vil tvinge Kina ud i en grim recession. I alle tilfælde er det yderst interessant om Kina vil kunne klare et uforudsigeligt økonomisk stød. Jeg tvivler.

Læs hele artiklen. Minxin Pei skriver også om den ekstreme ulighed, den meget voldsomme korruption og mange andre interessante emner. Jeg blev særdeles overrasket.