Thursday, 12 November 2009

Chinese democracy

The problem about lying is that one always gets caught. China can only lie as long as get-rich-quick investors and anti-West lobbyists want to believe her, like they believed Japan in the 1980s, but the truth is that a dictatorship with barely any respect for law and property trying to run an economy based on semi-slave labour cannot succeed unless it cheats the numbers. State-owned banks have been lending outrageous amounts of money to inefficient state-owned companies, in a sort of "creative accounting" to produce unreal GDP growth figures (see the excellent articles on the subject by Vitaliy N. Katsenelson) .

Government-planned economies never work, no matter how Chinese they are, and still remains the question of how a corrupt and despotic government will cope with several hundreds of millions of hungry unemployed once the bubble bursts.

1 comment:

banned said...

Much is made of Chinas $2 trillion in the piggy bank but, as Mark Wadsworth points out, that is only $1,500 per head; not much to show for ten years hard labour.

Mark Wadsworth, China