The free market tide is rising in China

An interesting story about market reforms in China but this particularly caught my eye:

China’s leaders, including a group of pro-market bureaucrats who seem to have gained in the leadership shuffle this year, seem to think that more government spending could worsen economic conditions and that the private sector needs to step in. . . .

The new leaders, who took office in March after a once-in-a-decade leadership transition, seem more determined to change course. In his speech this month, delivered to party officials nationwide by teleconference, Mr. Li, the prime minister, said, ‘If we place excessive reliance on government steering and policy leverage to stimulate growth, that will be difficult to sustain and could even produce new problems and risks.’

‘The market is the creator of social wealth and the wellspring of self-sustaining economic development,’ he said.

He spoke of deregulation and slimming down the role of government.

‘Li Keqiang thinks like an economist,’ said Barry J. Naughton, a professor of Chinese economy at the University of California, San Diego. ‘He wants the government to get out of the way.’

He actually doesn’t think like an economist, at least not an economist of the modern generation. But this is a tide that is rising. Watching the effects of regulation and the stimulus has been a very clarifying experience at least for some. The obstacles must be immense but at least there is recognition at the top about what now must change.

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25 Responses to The free market tide is rising in China

  1. Steve,

    I just do not see a government that is pushing “world social altruism” on Hong Kong children as a Moral Education Project as being in favor of free markets. This is the tenets the Chinese want to be the new values:

    “As far as altruism is concerned, children should be taught to extend their love and sacrifices to their parents and significant others to include acquaintances, neighbors, strangers in one’s country and people in other countries.”

    That’s not an official mindset that believes in individual freedom at all. Moral education is officially defined now in Hong Kong as teaching that the majority’s opinion and interests precede individual’s opinions and interests.

    http://www.invisibleserfscollar.com/using-education-to-shut-down-free-choices-and-then-redefining-as-personal-autonomy-orwell-lives/ is the story I wrote last fall. This initiative rolled out in September 2012 and will extend to secondary schoolchildren in September 2013.

    What I am seeing is the Chinese looking at ed reforms being pushed all over the world as creating the desired Mindsets that fit with their state-led, collective comes first approach. It’s even laid out in a chart put out a few months ago in connection with the Global Cities Education Network that Melbourne is involved in.

    What I am seeing is that the Chinese think the Koreans have the perfect Statist/Corporatist economic model.

  2. Steve,

    I just do not see a government that is pushing “world social altruism” on Hong Kong children as a Moral Education Project as being in favor of free markets. These are the tenets the Chinese want to be the new values:

    “As far as altruism is concerned, children should be taught to extend their love and sacrifices to their parents and significant others to include acquaintances, neighbors, strangers in one’s country and people in other countries.”

    That’s not an official mindset that believes in individual freedom at all. Moral education is officially defined now in Hong Kong as teaching that the majority’s opinion and interests precede individual’s opinions and interests.

    http://www.invisibleserfscollar.com/using-education-to-shut-down-free-choices-and-then-redefining-as-personal-autonomy-orwell-lives/ is the story I wrote last fall. This initiative rolled out in September 2012 and will extend to secondary schoolchildren in September 2013.

    What I am seeing is the Chinese looking at ed reforms being pushed all over the world as creating the desired Mindsets that fit with their state-led, collective comes first approach. It’s even laid out in a chart put out a few months ago in connection with the Asia Society Global Cities Education Network that Melbourne is involved in.

    What I am seeing is that the Chinese think the Koreans have the perfect Statist/Corporatist economic model.

  3. Well that just goes to show you the header may have said Ozblogistan is broken but please try again.

    But that was not necessarily true.

  4. It started rising about thirty years ago hardly news.

  5. Bruce

    He actually doesn’t think like an economist, at least not an economist of the modern generation.

    Nice bit of dry humour there Steve. Long Marcher Deng Xiaoping was probably more of a free marketeer than most of the economists in capitalist countries. Funny how economies do so well when you get governments off their backs.

  6. johno

    The market is the creator of social wealth and the wellspring of self-sustaining economic development

    How many modern day Maoist would ever expect to hear a leader of Mao’s murderous Communist Party say that.

    That’s one for the Liberty Quotes.

  7. Robbo

    In China there are words and there are actions and you need to pay proper attention to both if you want to determine reality. I have spent some time in China over the last 40 years and I have watched with interest the changes that have been allowed to develop. No matter what is being said the reality is that internal change is still being carefully managed by the government and nothing will change that in the long term. The term “free market” has no genuine place in China and even a cursory look at the myriads of so-called private businesses that operate will reveal that nothing significant happens without government approval. Given the history of modern China and the huge challenges it still faces in dealing with improving the living standards of its huge population I can see no other way than to continue as they have been. Taking the risk of swinging over to a true “free market” is not in the DNA of China’s leadership.

  8. In China (or any other country) there are words and there are actions and you need to pay proper attention to both if you want to determine reality. I have spent some time in China (Australia) over the last 40 years and I have watched with interest the changes that have been allowed to develop. No matter what is being said the reality is that internal change is still being carefully managed by the government and nothing will change that in the long term.

    Robbo your comments could apply to any nation on the planet. We could argue that the massive increase in tax to GDP ratio in Australia over the same period is not carefully managed (in our 2 party system where both players seem in absolute agreement) and I doubt the idea of careful management even in a 1 party state look at the internal workings of the Labor Party. It is politics and about what should we do now to keep the population happy. The start of your comment suggests that there is somewhere on the planet where you can trust politicians, you are kidding yourself “there are words and there are actions and you need to pay proper attention to both” this applies to any politician on the planet.

  9. Oh come on

    It started rising about thirty years ago hardly news.

    Kelly, you’re either a credulous or an undiscerning fool.

    Free market rising in China? No way. The market will continue to be gamed by the power elite who are far too invested in China Inc to start playing on a level field.

    Of course, this will result in the collapse of the economy and the likely breakup of the country.

    OK, here’s a foolproof test we can make in 5 years time to evaluate how effective Li Ke Qiang’s been in cleaning the hogs out of the massive trough that is China Inc. IN five years, what cars are Mr Li’s kids and the kids of Li’s colleagues driving? Lamborghinis? Maseratis? Maybachs? Rolls Royces?

    They’re easy to spot – just go to any hot Beijing nightspot, see who’s emerging from the million dollar cars, then compare with CCP inner party family shoots.

  10. Oh come on

    Perhaps I should have added that, if in 5 years the children and grandchildren of the top party leaders are still driving the world’s most expensive cars, then no – there is no free market rising in China, just more of the same as what came before.

  11. OCO

    The free market does not exist. But since Deng Xiaoping and the Singapore model, Singapore now rates fairly highly Number 2 after HK a part of China and great to see Australia is number 3. If you do not consider heritage.org impartial and you think they are undiscerning like me then yes you are right about the second bit. 5 years is just a blip check in 20 years who is leading China or US. Of course many things can happen so I have no idea who will be in the lead but current trajectory says China will be hands down.

  12. Oh come on

    Singapore and HK are very, very, very different from mainland China, Kelly. Not quite sure why you’re lumping those two free market success stories in with the Chinese nationalist socialist system, within which the “free market” occasionally reminds the rest of the world of its presence before quickly being sedated by its masters and taken out of site. Hey, laowai! (foreigner) Look at that shiny new office tower!

    In 20 years China will be further behind the US than it currently is. You read it here first.

  13. Fisky

    In 20 years China will be further behind the US than it currently is.

    Little doubt about it. If nothing else, they are going to be strangled by their demographics.

  14. Fisky

    Hey, laowai! (foreigner) Look at that shiny new office tower!

    Also, they need to get their heads around this: the sovereign risks of a foreigner losing their business to outright extortion/theft in China are no longer justified by low labour costs. Investors have plenty of other options. Is Beijing going to enshrine secure 100% foreign investment rights across the board, fully protected by the police and the courts? Unlikely. They will stick with the phony “You find a reawy reawy weliable wocal partner and give him all your money” model until their luck runs out.

  15. OCO

    “Later, Deng sent tens of thousands of Chinese to Singapore to study.”

    From wiki and why do you think he might have sent them for? to spy on Singapore. To point out the bloody obvious again HK is a part of China.

  16. Oh come on

    I previously said:

    In 20 years China will be further behind the US than it currently is. You read it here first.

    Perhaps I should have been a bit more far-sighted and said that “In 20 years time there’s a fairly reasonable chance that the geographic area we know today as China will no longer exist in a form that could pose a high level risk to global security.”

  17. OCO and Fisky
    You both seem to agree that HK might be ok so invest via HK if you have half a brain cell. There are only 2 key decisions to make when investing, will I make money and is that money safe. So low profile and via listed investments which are pretty good everywhere. I could be wrong in which case I will be poorer one day. Not about China but other countries that no one seems to trust also.

  18. Oh come on

    Kelly:

    well they didn’t bloody learn much, did they?! I’d say there was a LOT more was taken on board from the soviet-sino technical exchanges prior the split. 20 years later and Lee Kwan Yew wants to reeducate a bunch of Chinese bureaucrats – steeped in 30+ years of soviet bureaucratic culture – so they could be useful members of a free economy – pah! Top marks for trying, Lee, but no chance, son.

    To point out the bloody obvious again HK is a part of China.

    Oh, well spotted! HK is a part of China! Who knew? Nevertheless, the fact that your groundbreaking revelation may indeed be correct, it is also a particularly poor rationale as to why HK is rich and free whilst mainland China is a miserable place to live for the vast majority. Kelly, you are aware that HK did not become a free market beacon due to its handover to the PRC?

  19. Investment was mentioned which makes my ears prick up and HK is a conduit for investment and trade with China so thought I should mention the obvious which you seem to have not thought of. Without China HK is nothing.

  20. Fisky

    Kelly, the final line of that last comment of yours demonstrates the futility of continuing this discussion.

  21. Fisky Even when HK was British the main thing about it was being a conduit to mainland China. A pity the British seem to have been better rulers of others than themselves in this case.

  22. Yes it is probably futile at the moment to try to change my opinion but I will admit I am wrong if for example the GDP of China goes backwards compared to the US for 5 years running.

  23. Oh come on

    Oh for fuck’s sake Kelly READ SOME HISTORY.

  24. Oh come on

    Kelly: please investigate the Shenzhen Special Economic Zone. What purpose was this set up for; by whom and when?

    I feel that when you delve into this matter further, you will not consider Hong Kong and the mainland so culturally and economically (if not politically) entwined.

  25. Bruce

    About 25 years ago you could’ve said a lot of this about South Korea. Military government and Chaebols.

    China’s central committee almost certainly patterned the recent development arc on SK as well as Singapore and Japan in the sixties and seventies.

    The most serious problem is that China is so big they have already pretty much saturated the market for cheap manufactures worldwide, which means when the EU and US sneeze China instantly catches it too. That was not the case for Japan and Sth Korea’s development arc, since the world was big enough to cope with everything they could produce.

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