China’s economy

Originally published on Language and Philosophy, December 28, 2013

I’m reading Beardson’s new book on China’s economy. He observes that when the RMB rose against the dollar (2005-8), exports increased faster than imports, counterintuitively (and contrary to US wishes). Beardson attributes it to squeezing more productivity out of labor. He also reports that the Chinese banks, government controlled, lend mostly to government enterprises, devoting itself to infrastructure in the recession, far more than to the private sector, yet the private sector throve. It’s a picture of a resilient private sector independent of the political superstructure.

A young economy grows despite parental constraints. Reminds me of a passage in Smith comparing England’s aging economy with the American colonies’ youthful growth, except that colonial growth included high wages and full employment. That would change dramatically in industrialization and the immigration it depended on. China has the rough equivalent in the migration from the land to the manufacturing centers.

Trust a business man, who depends for his success on reality, to get the facts comprehensively and in depth. I find it difficult to trust critics, promoting their reputations on personal theories and selecting facts to dress them up; or utopian reformers and revolutionaries, viewing only blood and hope through their rose lens; and economists, most of whom undermine their credibility by their entrenched partisan polarization (I exempt Eichengreen and Cooper); and the journalists who, as outsiders, look at the economy almost as anthropologists studying exotic behavior. Reading Beardson is like getting advice on pianos from a tuner. Not the whole story, but a lot better than anyone esle that’s mongering them or themselves.