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In China, new leadership but familiar challenges
(L) Xi Jinping greets the media at the Great Hall of the People on November 15, 2012 in Beijing, China.
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On China’s new rulers to-do list: Tackle the nation’s widening wealth gap, clean up decades-worth of environmental neglect, and straighten out the kinks in the economy.
"The first and most immediate challenge is how to handle a slowing economy," says Patrick Chovanec, professor at Tsinghua University’s School of Economics and Management. "There are a lot of people who would like them to respond with stimulus and help pump the country back up, there are others who argue that what’s needed is more reform; even if that means slower growth in the short run."
If the new leaders choose a path of economic reform, says Chovanec, that will mean a transfer of capital from a public sector full of giant state-owned enterprises to the private sector, opening up China to more market competition.
Rob Schmitz: On China’s new rulers to-do list: Tackle the nation’s widening wealth gap, clean up decades-worth of environmental neglect, and oh yeah -- straighten out the kinks in the economy.
Patrick Chovanec: The first and most immediate challenge is how to handle a slowing economy.
Patrick Chovanec is a professor at Tsinghua University’s School of Economics and Management.
Patrick Chovanec: There are a lot of people who would like them to respond with stimulus and help pump the country back up, there are others who argue that what’s needed is more reform; even if that means slower growth in the short run.
If the new leaders choose a path of economic reform, says Chovanec, that’ll mean a transfer of capital from a public sector full of giant state-owned enterprises to the private sector, opening up China to more market competition.
Rob. Please don't get tunnel vision and constrain your analyses with U.S. stereotypes and economic models. Remember the old adage: to a carpenter, every solution looks like a hammer and nails. If you limit yourself to western concepts like: GDP, fast and slow economy, private and public sector, and competition, we'll all be caught sleeping if a welder and iron I-beams show up. China has the ability to do that. I'll give three examples to make this point.
The U.S. keeps dabbling with high speed trains. Florida is proposing a Tampa to Miami route with a top speed approaching 170 mph. So, to judge the financial impact of China's rail improvements, you might ask U.S. planners for rail-based financial models. After posting an article on that basis, you'd be caught totally blind in the headlights when you found out that China is already prototyping a 6000 mph ultra-efficient train! No U.S. model applies.
What if you found out that the Chinese discovered a NEW form of DEMOCRACY, unlike any known in the western world, that didn't have all the failings of U.S. democracy. What then? What if the Chinese developed a new type of computer that was a MILLION times faster than the best U.S. super computer. What then?
Please. Be very open minded about what you are learning.
