This is a rarity, an article on the Chinese economy which forecasts that it is going nowhere. By Rowan Callick in The Australian yesterday: Ticking time bomb: why Xi is dragging down the dragon. The sub-head: “It’s a scenario that has become almost unthinkable, but what if China’s economy — which is being driven substantially by Western stimulus funding — starts to slide backwards”.
It is the innate belief by virtually everyone that a centralised socialist economy can outperform a free market capitalist economy. It is the combination of Keynes with Marx that makes this seem to make some kind of sense, but these are both macro views of the world without a smidgeon of microeconomic thought about how resource allocation is to occur so that inputs flow towards their highest valued uses. I thought this was a pretty big sign of the times for Victoria the other day when it handed down its insane budget: Curious case of the missing budget paper:
The Andrews government has come under fire for omitting a key budget paper revealing expenditure on infrastructure projects, sparking accusations from the opposition that it is censoring the budget.
What are they hiding, you might ask. Head down St Kilda Road sometime and see the massive works on the station at The Shrine, a billion dollars worth of uncompleted construction to build a station where no one ever goes, other than on ANZAC Day. Centralised economies become such disasters that eventually there is no hiding the problems any longer. And so it is with China. For me, this is evidence of an economy in a complete shambles:
The consumption share of China’s economy is low today — only 39 per cent of GDP — compared with 66 per cent in the US, and it is well below the 45 per cent reached in China itself at the start of the 2000s.
Oz also has around 66% consumption share. The article also shows the published GDP stats:
GDP is such a misleading indicator. I used to love pointing out the massive holes in front of our building at RMIT where our state socialists are building some kind of station for a train line that won’t be operational for seven years. All that expenditure goes into the National Accounts, but not until the train line opens will there be even a single dollar’s worth of value added returned for all of the prior expense.
So with China. The Chinese are amongst the most entrepreneurial people on the planet, but if their entrepreneurs are overridden by political leaders it will not mean a thing.
As for our dealings with the Chinese, foreign policy should not be mixed up with trade. We are part of the Western alliance. There is no abandoning our foreign policy essentials even in a Biden-led America (heaven help us). If China won’t buy our coal and lobsters sell to someone else. Markets, as mysterious as they are to your average socialist nong, are our friend.