William Pesek: Reagan's Revolution Is Getting Chinese Makeover
[William Pesek is a Bloomberg News columnist.]
Ronald Reagan wouldn’t be happy.
The free-market revolution that the U.S. president championed in the 1980s isn’t just over. It’s about to get a Chinese makeover as officials in Beijing assert themselves as rarely before. The way they are scolding the world ahead of this week’s Group-of-20 meeting leaves little doubt about that.
Now let’s see, what can China teach us about running an economy? First, don’t lend $740 billion to someone you worry can’t pay you back (Whoops, did that!). Second, don’t rely on a single industry such as manufacturing for growth (Damn, did that!). Third, don’t ratchet up defense spending when your economy needs fixing (Oh man, did that, too!).
The point here isn’t to pick on China. Nor is it to defend Reaganomics and its simplistic faith in the wisdom of markets. The laissez-faire crowd has done more than enough damage with its contempt for regulation and its financial innovation. The point is that we shouldn’t get ahead of ourselves in thinking China has a how-to guide for others to emulate.
Give credit where it’s due. China has done an impressive job of raising millions of people out of poverty. Its rapid growth filled a void in Asia left by a Japan that never fully recovered from the deflation of the 1990s. China worked fast to shield its 1.3 billion people from the global credit crunch.
Load of Cash
Yet having a load of cash -- including $2 trillion of currency reserves -- doesn’t necessarily make you an economic leader. It does buy you considerable influence, particularly when you hold the deed to the world’s biggest economy. China is playing a role somewhat akin to that of financier John Pierpont Morgan in 1907. Its money is propping up the U.S.
As the third-biggest economy, China will have a prominent seat at the table when G-20 officials gather in London on April 2. It’s still not clear what the world can learn from a nation that has so little in common with developed ones.
It’s no mystery why China’s top-down system has yet to create an indigenous corporate star. For all its challenges, India has produced names such as Infosys Technologies Ltd. and Tata Motors Ltd. China’s focus is still on acquiring recognized names from overseas rather than creating an environment to empower entrepreneurs.
Who knows, perhaps history will show China is creating a smart model here: leapfrogging over an entire level of development. Yet how does a country that censors Google and polices the Internet so actively compete in the Information Age?..
Read entire article at Bloomberg
Ronald Reagan wouldn’t be happy.
The free-market revolution that the U.S. president championed in the 1980s isn’t just over. It’s about to get a Chinese makeover as officials in Beijing assert themselves as rarely before. The way they are scolding the world ahead of this week’s Group-of-20 meeting leaves little doubt about that.
Now let’s see, what can China teach us about running an economy? First, don’t lend $740 billion to someone you worry can’t pay you back (Whoops, did that!). Second, don’t rely on a single industry such as manufacturing for growth (Damn, did that!). Third, don’t ratchet up defense spending when your economy needs fixing (Oh man, did that, too!).
The point here isn’t to pick on China. Nor is it to defend Reaganomics and its simplistic faith in the wisdom of markets. The laissez-faire crowd has done more than enough damage with its contempt for regulation and its financial innovation. The point is that we shouldn’t get ahead of ourselves in thinking China has a how-to guide for others to emulate.
Give credit where it’s due. China has done an impressive job of raising millions of people out of poverty. Its rapid growth filled a void in Asia left by a Japan that never fully recovered from the deflation of the 1990s. China worked fast to shield its 1.3 billion people from the global credit crunch.
Load of Cash
Yet having a load of cash -- including $2 trillion of currency reserves -- doesn’t necessarily make you an economic leader. It does buy you considerable influence, particularly when you hold the deed to the world’s biggest economy. China is playing a role somewhat akin to that of financier John Pierpont Morgan in 1907. Its money is propping up the U.S.
As the third-biggest economy, China will have a prominent seat at the table when G-20 officials gather in London on April 2. It’s still not clear what the world can learn from a nation that has so little in common with developed ones.
It’s no mystery why China’s top-down system has yet to create an indigenous corporate star. For all its challenges, India has produced names such as Infosys Technologies Ltd. and Tata Motors Ltd. China’s focus is still on acquiring recognized names from overseas rather than creating an environment to empower entrepreneurs.
Who knows, perhaps history will show China is creating a smart model here: leapfrogging over an entire level of development. Yet how does a country that censors Google and polices the Internet so actively compete in the Information Age?..