horse of george

In an Economist review of a book called 'Red Capitalism' wherein the book's authors, two American bankers who have worked extensively in China, claim that the Chinese economic miracle is in many ways a facade behind which hides a great deal of dysfunction and inefficiency - a point I have often made [although I merely guess at this reality rather than state it authoritatively, having not the expertise etc] - anyway, in the review there's this paraphrase of another point the authors make:

As the book details, the whole business of providing, receiving and regulating money involves one state entity or another. It may be in China’s overall interest for the system to open itself up, but doing so would pit the government against itself. That will not happen without commitment from those on top.

This is a looming dynamic that I've referenced before: it's naive to imagine there are not problems lurking beneath the surface of Chinese styled capitalism; but to solve and reform these problems before the advent of a crisis will require the massive Chinese bureaucracy and its leaders to take significant risks which will probably imperil their privileged place in the community - therefore it's naive to believe they will willingly take on these risks; consequently, when the crisis comes, whether it's 5, 10, 20 years from now, the most likely response will not be reform or self reflection but rather an embrace of avoidance and the casting of blame somewhere else - America, no doubt. Certainly, a lack of reform will imply that America and China will be engaged in an increasingly tense competition for influence, not only in Asia, but across the globe - and therefore blaming America will hardly seem a desperate leap to the Chinese people, especially since a chauvinistic stoking of Chinese nationalism will no doubt accompany the emerging crisis.

This is why I tend to be a China sceptic.