Saturday, April 26, 2014

Excellent Speech by Wang Hui at Economic Progress and Financial Reform in China Conference

It is now widely realized that China's sustainable economic growth rate is slowing and its unprecedentedly high investment ratio is unsustainable. It is less well recognized that its investment ratio implies a growth rate in the capital stock (perhaps 12% or more) that is hugely higher than the current speed limit on Chinese economic growth (per- haps 7% or less). To adjust the former down to the latter obviously risks a powerful accelerator multiplier contraction. So the issue at hand is whether China will bite the bullet now and take the pain or defer doing so to a later date. As it is a command economy and its overall debt to GDP ratio is still well below levels that have proved to be ceilings in other economies, it could well defer.

 But if the country moves too quickly toward Western style financial liberalization, this might well complicate the rebalancing process.

It has becoming increasingly clear that debt growth has been so great in recent years the Chinese authori- ties will now try restraint/reform/rebalancing. Because the Chinese growth disequilibrium is now so wide, and the debt dependence of its fixed investment so great, these policies may well inflict too much pain on too many vested interests. In time a "stop" phase of a "stop go" policy will once again give way to a go phase led by debt dependent state-sponsored investment. But we will first get that "stop" phase involving restraint/reform/rebalancing. This panel examines a range of views on what everyone regards as a critical issue for the global economy.

See Also:

Political Economy Research has been critical of Tsinghua University for its neo-liberal economics but we welcome the ideas of the Philosopher from Tsinghua University Wang Hui talking about food has a public good not just a free market commodity.

Concerning the Land Question and the Agro Industrial complex and capitalisms false fixes to ecological problems read  article from 2012 here :

We hope that the ideas of Wang Hui on Food Security and Land Pollution in China are taken seriously by the Chinese People's Consultative Committee and we begin to see actions from the Chinese Government in the near future.