贸易企业出口退税:3 fault lines running through China's economy...

来源：百度文库编辑：九乡新闻网时间：2024/04/29 05:29:49

3 fault lines running through China's economy

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The notion of “American decline” is once again en vogue. But Americans should not let paranoia cloud a reasoned appraisal of China’s strengths and weaknesses. China’s economy contains three potential fault lines that threaten its long-term economic stability.

1) Can China handle Its infrastructure bubble?

In the aftermath of the global financial crisis, China forced its state-run banks to lower lending standards and make as many loans as possible to support infrastructure and real estate development, which according to various estimates accounts for nearly 20% of the Chinese workforce.

Although vast infrastructure investment helped China grow at near double-digit rates, their current spending spree illustrates why it’s sometimes possible to have too much of a good thing (for an example of China’s infrastructure spending run amok, see this see this fine documentary on China’s ghost cities).

Because of their political control, Chinese banks must lend to ever-more dubious projects for ancillary, non-business reasons. When these investments fail to yield an adequate rate of return, these loans drop in value. To maintain bank lending and thus high levels of employment, China buys up these non-performing loans from the banks and puts them into separate, state-run entities of which the Chinese government is the ultimate creditor. This bank balance sheet cleansing begins the process of lending anew, leading to more loans, more speculation, and ultimately greater defaults. But because they are the ultimate backstop to this speculative lending, the Chinese government is really the sucker in its own Ponzi scheme.

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2) Can China become an innovation economy?

China’s rapid growth depends on its access to buoyant global markets and cheap labor. Low wages and an undervalued nominal exchange rate kept Chinese export prices low, flooding global markets with Chinese goods. This process worked well when China had low unit-labor costs and trading partners with an insatiable demand for Chinese goods.

Economic theory postulates that as countries get richer, they move up the “value chain” of production, first from net exporters of raw materials, to manufacturing (China’s current stage), and later to high-end industrial goods with breakthrough technological innovation.

Counterfeiting and software piracy run rampant in China, for instance. Developing the institutional framework and cultural respect for intellectual property will take time, and there is no guarantee that China can become an innovation economy.

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3) Can China manage long-term demographic and political challenges?

There are two oft-cited long-term challenges to China’s economic model that are also worth mentioning. First and perhaps most pressing is their rapidly-aging workforce. Rising dependency ratios usually lead to slower growth and greater demands for public pensions, both of which will tax China’s working age population.

But observers in the West should be realistic in their appraisal of the long-term potential of the Chinese economy.

Instead of looking abroad and demonizing China’s anti-U.S. policies like their currency manipulation, Americans would be better off looking inward, maintaining a quiet confidence in the durability of its economic and political institutions while continuously trying to reform from within, bearing in mind that the internal contradictions of Chinese capitalism will expose themselves over time.

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