Originally posted by DOR
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Adding banking, infrastructure construction, real estate development, high technology (really?) and small sectors (whatever that is) at this point is changing the subject because you haven’t got any facts to back up what you started with. I'm not sure what you were on about in the rest of the post, so I'll just stop here.
What is your problem?
Edit:
Actually you know what, I take back some of my criticism of you, because now I see where there was a miscommunication.
I think what you meant to say with the data set, was: here is a compendium of published economic data on major sectors of the Chinese economy and as an example, here a a few numbers you tallied up. However, if I looked through the other numbers, they would also support your position that the state is no longer dominant. You did not necessarily mean that the numbers you posted could, by themselves, prove that the economy was not state led.
Unfortunately, I lost the signal when you launched into your rant about being an economists for 40 years.
However, my point still stands. The Chinese government the commanding heights of the economy and therefore the direction of the economy. It does so to a much greater extent than occurs on the West. So much so that I consider it to be a state run economy with market economics.
Let me give you an example:
Say you are a local government in China and the provincial and central governments and the state railway development corporation decides to run a high speed rail through your area with a new stop at a particular site. The local government then makes land at the site available for "long term lease" to developers, who have back channel connections to the local officials. The local government also creates government associated development corporation who participates as a minority partner in the developments, but whose presence on the venture allows the venture to obtain loan guarantees from the state development bank. That initial guarantee signals implicit state backing for the venture (whether true or not), allowing other private investment entities to pile in with investments. Meanwhile, back channels with the local government allow the developers to evict existing land users, sail through environmental reviews, obtain all permits for any construction work, and build up the assets in Chinese time.
Now, we look at the result from the perspective of your economic numbers:
The infrastructure spending isn't clearly accounted so it's missing from the tally.
The local government investment vehicle is only a minority partner.
The state development bank just provided a loan guarantee.
So, by all appearances, the majority of the assets belong to the private sector, the majority of the investments came from the private sector, and the urban jobs that result (retail shops, apartment building managers), are 90% private.
Yet, it's also pretty clear that the government planned and orchestrated the whole thing. Nothing would have happened without the government's direction.
Now you might say, same thing with real estate developments in the US. Well, crucial differences: the bank is not state run (the Fed is at least one tier removed), the land is not usually public land, you don't have a massively funded and highly activist state owned infrastructure builder involved, the connection between the local government and the developers are much more structured and under a more rigorous legal framework, and if you had business differences with the local county official you don't run the risk of having the police kidnap you and give you a stern talking to (or worse). In my view, the private sector was just the help. The private sector participants were all replaceable. It was the state sector that was calling all the shots in the example I just gave.
And we can't really see or understand that from the data in the economics year book. That's why I'm saying it's a structural issue. That's why I think state control over the banking and infrastructure sectors, and state support of high tech companies like Huawei are so important. Those are the linchpins. With the largest players in those sectors under state control, state support or heavy state influence, the government has a deep ability to move the economy.
Now, I take your point that the private sector activity in China is so large today that the state can't have a grip on it all. That, I think, is true. However, the state still determines the strategic directions of development, and, should it desire, it can assert itself in any sector it sees fit at any time it sees fit with none of the legal and political limitations that Western governments would face.
Just look at what happened during the recent Chinese stock market crash, or even more recently the heavy handed clamp down on entities such as Anbang. In fact, the An bang shows that large corporations are no less vulnerable to state influence than small ones. In fact, large corporations might be even more amenable to application of state power to greater effect because their well defined management structure lends itself to state takeovers with minimal changes in daily operations. Top level owners and executives are therefore more beholden to soft influence by the state, and just as vulnerable to hard power.
One look at all of the CEOs and companies railing against the Trump administration in the US tells you that's not the case here.
Under Xi Jinping, there appears to be a substantive reassertion of state control so that trends that were handing more economic control to the private sector of the Chinese economy appear to be actually reversing. This is not just my own opinion but current conventional wisdom.
http://www.scmp.com/comment/insight-...ger-role-state
I think if you want to dispute this, you need to either present why you think these effects are not important, or argue why you think the trend towards more market power is irreversible.
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