China’s Institutional Challenge by Andrew Sheng and Xiao Geng – Project Syndicate

Project Syndicate

Project Syndicate (Photo credit: Wikipedia)

This is an excellent article from Project Syndicate. It’s a recommended read.

The article features the work of the Nobel laureate economist Douglass North, who died last month, citing it as going a long way toward explaining China’s dramatic changes over the last three decades, as well as illuminating the challenges that lie ahead. It argues that North’s message should temper the pessimism that pervades most current discussion of China’s prospects.

Source: China’s Institutional Challenge by Andrew Sheng and Xiao Geng – Project Syndicate

John Gelmini and I have used this blog repeatedly to challenge assumptions about a hard-landing for China. It is important to remember that China has already challenged many traditional assumptions about economic growth, social change and political liberalism.


One response

  1. Dr Alf is right, China is now moving to a 2-speed economy in order to avoid a hard landing.
    The South China Morning Post describes the strategy in action whereby traditional smokestack industries are being slowed down and investment is pouring into the new high-tech areas that the Chinese leadership has identified for growth.

    The second strand is increased overseas investment into industries which the Chinese can then reshore production back to themselves or robotize.

    The 3rd strand is the continuation of the “Go out/Bring back in ” policy whereby the practically minded are encouraged to migrate overseas, send money home to elderly relatives and establish new businesses which keep them and their families.

    The 4th strand is to invest in infrastructure projects which are essential to transportation, energy generation, life essentials and transport in those countries.

    Hinckley Point, Bradwell, the London Underground, the Nicaraguan canal, Wessex Water, Manganese Bronze and the Port of Felixstowe are all part of this process along with reducing exposure to the dollar.

    Lord Rothschild, whose judgement is extremely sound, saw China’s potential years ago and from his enormous mansion in Shanghai is able to see how his investments are doing first hand.

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