7 ms·

Will China’s Economy Hit a Great Wall?

47 points by deafcalculus 8y ago

lyndonjohnsonbe 8y ago
The best thing said in the article is "Many people have been predicting a China crisis for a long time, and it has kept on not happening". Since China has a planned economy with a strong grip from the government, they could keep things going for a while. No planned economy has ever gotten so big
- simonh 8y ago
  The state enterprise side of the economy is planned, but the private capitalist - sorry, communist with Chinese characteristics - sector accounts for 60% of GDP growth and half of fiscal revenue[0]. That strong grip does more harm than good IMHO. Just look at how appallingly badly they mismanaged their domestic stock markets over the last few years. [0] http://www.xinhuanet.com/english/2018-03/06/c_137020127.htm http://www.xinhuanet.com/english/2018-03/06/c_137020127.htm
yostrovs 8y ago
Seemingly an empty article, as though the author had nothing else to write about.
- keyle 8y ago
  He came up with a great title and then he thought the article should happen. Also he's paid to write.
FreedomToCreate 8y ago
This is an perfect example of a news for the sake of news. The author twice points out that he could be wrong and that they can't really predict at all. I guess if things do go south, he will be able to use this article to point out that he had predicted it and that he is a economic guru.
- conanbatt 8y ago
  Honestly, all economic reporting should come with a small box showing the author making a bet on his own analysis. At least if he turns out to be wrong, you would know he was honest and really believed it and that he paid a price for his mistake.
rossdavidh 8y ago
I respect anyone who is willing to point out when they were wrong before. In regard to China, I think that they (like the Soviet Union before them) were very good at playing catch-up, because command economies are very good at getting everybody on board to do the thing which everyone knows needs to be done. "Do this, or we will put you in prison or worse." However, once you have (mostly) caught up, it becomes less obvious what the next thing to do is. Literal moonshot? Fiberoptic internet to every house in the nation? Particle accelerator that can hit energies never before reached? Every student gets a spot in a university? Some of these might be good ideas, some might be boondoggles. It's hard to know, when you're nearing the front of the pack. The Soviet Union was great at playing catch-up until, sometime in the mid 60's, they were too close to the forefront to be able to clearly see what needed to be done next. China's Communist Party is great at getting everyone to do what they have decided to do. I think it is going to be harder for them to figure out what an economy, of their size and relatively advanced state, should be doing next. If they guess wrong, it will be ugly.
- PhilWright 8y ago
  I would agree that a developing economy can copy the best practices and latest technology from the leading economies to, relatively, quickly catch up. You say that the USSR got close to the leading economies in the mid 60's. But that does not explain why they fell so far behind afterwards. How come they did not continue to be just behind for the succeeding decades?
  - dasil003 8y ago
    Because once you're close the sense of urgency wears off, people get comfortable and corruption sets in.
  - rossdavidh 8y ago
    The point is, that once you have (nearly) caught up, it is less clear what needs to be done next, and command economies are not as good at that.
  - simonh 8y ago
mrandish 8y ago
As usual, Krugman has little to say and takes his time not saying it.
- Mikeb85 8y ago
  Krugman won a Nobel Memorial prize for studies on a fairly specific topic and since then, hasn't done much other than be a political pundit. At least he's kind of admitting to being wrong with his predictions concerning China.
- woodandsteel 8y ago
  Some of it was new to me, and I suspect to many of his readers.
nopinsight 8y ago
Endogenous growth theory, for which Paul Romer won a 2018 Nobel prize in economics, implies that long-term economic prosperity depends on the spread of knowledge and technological innovation in the economy. [1] If these are the primary factors, then the closest analogues to China would be other East Asian economies like Japan and South Korea. These nations greatly value education, with top-tiered performance in international tests, and invest heavily in R&D. An oft-repeated criticism that authoritarianism constrains scientific and technological creativity is still unproven and will be tested in the coming decades by China. [2] [1] From Wikipedia: “Endogenous growth theory holds that economic growth is primarily the result of endogenous and not external forces.[1] Endogenous growth theory holds that investment in human capital, innovation, and knowledge are significant contributors to economic growth.” https://www.nobelprize.org/prizes/economic-sciences/2018/press-release/ https://www.nobelprize.org/prizes/economic-sciences/2018/pre... https://en.m.wikipedia.org/wiki/Endogenous_growth_theory https://en.m.wikipedia.org/wiki/Endogenous_growth_theory [2] How China could dominate science. https://www.economist.com/leaders/2019/01/12/how-china-could-dominate-science https://www.economist.com/leaders/2019/01/12/how-china-could...
- nopinsight 8y ago
  My prediction: To reinvigorate the economy, China will invest even more heavily in technological R&D as a form of economic stimulus since the last round of 2008 stimulus already resulted in some superfluous infrastructure. Its R&D spending as a percentage of GDP is already head & shoulders above most other developing economies and in fact above several Western European economies (it is close to the level of France) but still below Japan and South Korea, for example. https://en.m.wikipedia.org/wiki/List_of_countries_by_research_and_development_spending https://en.m.wikipedia.org/wiki/List_of_countries_by_researc...
- throwaway32r5y 8y ago
  One thing to point out is China still has around 600 million citizens that live in poverty. Just getting them up to current Chinese standards will ensure China’s economy for awhile.
  - 8y ago
onetimemanytime 8y ago
>>The case for crisis seems compelling – but I said that in 2011, too. Just a matter of time son, you will be proven right one day. Just keep repeating it.
vkaku 8y ago
The manufacturing economy is done. They're trying to re-invent themselves. They may become the next Japan.
m0zg 8y ago
https://www.youtube.com/watch?v=cZ5dVBa3grw https://www.youtube.com/watch?v=cZ5dVBa3grw. I don't know why anyone still reads or listens to this clown.
- yostrovs 8y ago
  I think it's because he's a Nobel winner that agrees with the sympathies of the readers of the New York Times. This way the readers can think they're smart, since they can understand the writing of a Nobel, while not being challenged to actually have to think about something they may not agree with.
deleted 8y ago
[deleted]
thedudeabides5 8y ago
yes, obvi
woodandsteel 8y ago
Something very interesting about this comments section. For years now when HN had a link about problems with the Chinese economy, there would be number of comments from China defenders who would say no, things are fine and the government knows exactly what it is doing. I strongly suspected many of them were paid government trolls. This time we are aren't getting any such comments. Instead we have gotten a number of attacks on Krugman, without saying anything specific about how his analysis is wrong. I could be mistaken, but I am guessing that the troll minders see they can't make a real defense, so they are trying to just distract readers away from what Krugman had to say.

47 points by deafcalculus 8y ago

The best thing said in the article is "Many people have been predicting a China crisis for a long time, and it has kept on not happening". Since China has a planned economy with a strong grip from the government, they could keep things going for a while. No planned economy has ever gotten so big

simonh 8y ago
The state enterprise side of the economy is planned, but the private capitalist - sorry, communist with Chinese characteristics - sector accounts for 60% of GDP growth and half of fiscal revenue[0]. That strong grip does more harm than good IMHO. Just look at how appallingly badly they mismanaged their domestic stock markets over the last few years. [0] http://www.xinhuanet.com/english/2018-03/06/c_137020127.htm http://www.xinhuanet.com/english/2018-03/06/c_137020127.htm

yostrovs 8y ago

Seemingly an empty article, as though the author had nothing else to write about.

keyle 8y ago
He came up with a great title and then he thought the article should happen. Also he's paid to write.

FreedomToCreate 8y ago

This is an perfect example of a news for the sake of news. The author twice points out that he could be wrong and that they can't really predict at all. I guess if things do go south, he will be able to use this article to point out that he had predicted it and that he is a economic guru.

conanbatt 8y ago
Honestly, all economic reporting should come with a small box showing the author making a bet on his own analysis. At least if he turns out to be wrong, you would know he was honest and really believed it and that he paid a price for his mistake.

rossdavidh 8y ago

I respect anyone who is willing to point out when they were wrong before. In regard to China, I think that they (like the Soviet Union before them) were very good at playing catch-up, because command economies are very good at getting everybody on board to do the thing which everyone knows needs to be done. "Do this, or we will put you in prison or worse." However, once you have (mostly) caught up, it becomes less obvious what the next thing to do is. Literal moonshot? Fiberoptic internet to every house in the nation? Particle accelerator that can hit energies never before reached? Every student gets a spot in a university? Some of these might be good ideas, some might be boondoggles. It's hard to know, when you're nearing the front of the pack. The Soviet Union was great at playing catch-up until, sometime in the mid 60's, they were too close to the forefront to be able to clearly see what needed to be done next. China's Communist Party is great at getting everyone to do what they have decided to do. I think it is going to be harder for them to figure out what an economy, of their size and relatively advanced state, should be doing next. If they guess wrong, it will be ugly.

PhilWright 8y ago
I would agree that a developing economy can copy the best practices and latest technology from the leading economies to, relatively, quickly catch up. You say that the USSR got close to the leading economies in the mid 60's. But that does not explain why they fell so far behind afterwards. How come they did not continue to be just behind for the succeeding decades?
- dasil003 8y ago
  Because once you're close the sense of urgency wears off, people get comfortable and corruption sets in.
- rossdavidh 8y ago
  The point is, that once you have (nearly) caught up, it is less clear what needs to be done next, and command economies are not as good at that.
- simonh 8y ago

mrandish 8y ago

As usual, Krugman has little to say and takes his time not saying it.

Mikeb85 8y ago
Krugman won a Nobel Memorial prize for studies on a fairly specific topic and since then, hasn't done much other than be a political pundit. At least he's kind of admitting to being wrong with his predictions concerning China.
woodandsteel 8y ago
Some of it was new to me, and I suspect to many of his readers.

nopinsight 8y ago

Endogenous growth theory, for which Paul Romer won a 2018 Nobel prize in economics, implies that long-term economic prosperity depends on the spread of knowledge and technological innovation in the economy. [1] If these are the primary factors, then the closest analogues to China would be other East Asian economies like Japan and South Korea. These nations greatly value education, with top-tiered performance in international tests, and invest heavily in R&D. An oft-repeated criticism that authoritarianism constrains scientific and technological creativity is still unproven and will be tested in the coming decades by China. [2] [1] From Wikipedia: “Endogenous growth theory holds that economic growth is primarily the result of endogenous and not external forces.[1] Endogenous growth theory holds that investment in human capital, innovation, and knowledge are significant contributors to economic growth.” https://www.nobelprize.org/prizes/economic-sciences/2018/press-release/ https://www.nobelprize.org/prizes/economic-sciences/2018/pre... https://en.m.wikipedia.org/wiki/Endogenous_growth_theory https://en.m.wikipedia.org/wiki/Endogenous_growth_theory [2] How China could dominate science. https://www.economist.com/leaders/2019/01/12/how-china-could-dominate-science https://www.economist.com/leaders/2019/01/12/how-china-could...

nopinsight 8y ago
My prediction: To reinvigorate the economy, China will invest even more heavily in technological R&D as a form of economic stimulus since the last round of 2008 stimulus already resulted in some superfluous infrastructure. Its R&D spending as a percentage of GDP is already head & shoulders above most other developing economies and in fact above several Western European economies (it is close to the level of France) but still below Japan and South Korea, for example. https://en.m.wikipedia.org/wiki/List_of_countries_by_research_and_development_spending https://en.m.wikipedia.org/wiki/List_of_countries_by_researc...
throwaway32r5y 8y ago
One thing to point out is China still has around 600 million citizens that live in poverty. Just getting them up to current Chinese standards will ensure China’s economy for awhile.
- 8y ago

onetimemanytime 8y ago

>>The case for crisis seems compelling – but I said that in 2011, too. Just a matter of time son, you will be proven right one day. Just keep repeating it.

vkaku 8y ago

The manufacturing economy is done. They're trying to re-invent themselves. They may become the next Japan.

m0zg 8y ago

https://www.youtube.com/watch?v=cZ5dVBa3grw https://www.youtube.com/watch?v=cZ5dVBa3grw. I don't know why anyone still reads or listens to this clown.

yostrovs 8y ago
I think it's because he's a Nobel winner that agrees with the sympathies of the readers of the New York Times. This way the readers can think they're smart, since they can understand the writing of a Nobel, while not being challenged to actually have to think about something they may not agree with.

deleted 8y ago

[deleted]

thedudeabides5 8y ago

yes, obvi

woodandsteel 8y ago

Something very interesting about this comments section. For years now when HN had a link about problems with the Chinese economy, there would be number of comments from China defenders who would say no, things are fine and the government knows exactly what it is doing. I strongly suspected many of them were paid government trolls. This time we are aren't getting any such comments. Instead we have gotten a number of attacks on Krugman, without saying anything specific about how his analysis is wrong. I could be mistaken, but I am guessing that the troll minders see they can't make a real defense, so they are trying to just distract readers away from what Krugman had to say.