Chinese Economics Thread
- Thread starter Norfolk
- Start date
I never said that china was a world power, but that it is a big economy
Sure, i myself am laughing.
You deny that many of the SOE are inefficient and unprofitable? And i never said for china to emulate india. But china needs economic reforms.
Of course it works. Until its doesnt.
State intervention is necessary in an economy, of course, and the chinese economy needs state intervention. I think that R&D financing is one of the areas that the chinese government must focus. But one thing is a capitalist economy with limited state intervention, another is an state capitalist economy where not only the state intervenes heavily but worst of all own much of the economy.
Not quite. In the case of china, the government (central and local) much of the priority goes to employment for obvious political reasons, while a private company prioritizes profit and effficiency.
I think focusing on employment is very important for any functioning government that cares about the people.
So, China isn't doing anything out of norm. The SEO is a helpful tool in China's arsenal that many countries (especially large developing ones) want to have.
Even when critics and foreign "analysts" say SEOs are inefficient (true to some extent) , what SEOs give China is more levers and flexibility. Using these, like operating a crane, China can shift resources and absorb impacts. SEOs in China doesn't exist outside the loop of Global Free Market network and that is the Reason why SEOs of China doesn't rot and crumble and their "gross inefficiency" is kept at manageable levels.
The inefficiency is traded for better control over the overall economic machinery. I'm pretty sure foreign critics understand this. They just try to sweep it under the carpet.
Chinese SEOs are constantly trying to further integrate and learn from the management and resource allocation of the Private companies in Free Market. Competition within and outside China is also a strong motivator.
manqiangrexue
Brigadier
So of course I agree that China needs to make more and more opportunities for its poor to be enriched but it seems it's been doing just that and it's not in a bad situation. The gini coefficient measures wealth gap with 0 meaning total equality and rising numbers pointing to inequality. It seems that China's gini was highest in 2010 when it reached 43.7, at which point it dropped every year. In 2016, it had fallen to 38.5. That year, the US came in at 41.4 and is on a slow ascent.
solarz
Brigadier
You're about five years behind the times. These days, people in China are no longer looking at the super wealthy, they are looking at the countryside and dreaming of getting back to a simpler life.
My bad, i meant india, not china.
Of course, but that doesnt mean that a government should create state companies just to keep people employed. Thats the job of the private economy.
State companies have an advantage in dealing with the state, (important in a country like china), to the detriment of the private companies. Also, IMO they are a way to give employment to people connected to political power and their friends, regardless of competence.
To control the economy so that they dont have unemployment and social unrest. But if other nations deal with the economic crisis without SOE´s, why cant china?
Who told you other nations don't deal with economic crisis without SOEs ? SOEs are very critial and more often the largest employers in Developing countries.
Even developed countries have SOEs.
Remember, China is still a socialist country, and SOE is still essential.
In fact there is argument for SOE is most countries, including the West.
It is the SOEs that are used by Chinese government to implement policies beneficial for the whole countries.
Case in point is the massive 4G mobile communication infrastructures that allow almost all rural areas to have 4G coverage.
There are about 5.5 millions 4G base stations in China, compared with less than 100,000 in US, and that the reason why mobile payment and mobile e-commerce has taken off in China.
In fact there is argument for SOE is most countries, including the West.
It is the SOEs that are used by Chinese government to implement policies beneficial for the whole countries.
Case in point is the massive 4G mobile communication infrastructures that allow almost all rural areas to have 4G coverage.
There are about 5.5 millions 4G base stations in China, compared with less than 100,000 in US, and that the reason why mobile payment and mobile e-commerce has taken off in China.
In certain industries, you have natural monopolies.
Examples include the gas distribution network, the water supply network, telecomms etc.
In those cases, SOEs make the most sense, because a private monopoly will raise prices as high as possible AND also not make investments unless it directly increases their revenue.
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But that is a separate argument to SOEs providing employment, or being the vehicle for increased government spending to counter a recession.
If China wants to boost demand and employment, I think suitable areas would include:
1. Primary and secondary education, particularly in rural areas and migrants. This does need improvement, and would provide a significant number of teaching jobs, with most of the money ending up as wages being being spent immediately
2. Research spending. This is mostly ends up as wages, which again would end up being spent immediately.
This costs money in the short-term, but has longer term payoffs to society as a whole.