Economic View of China

Brad DeLong paints a glorious picture of Deng Xiaoping, which comes from examining the Chinese system through the rosy glasses of Western Economics. It would not pain me so much if the Deng system was not simply a reversion to the pre-Communist Mandarin system. The Communist hierarchy was replaced by a bureaucratic hierarchy with much higher levels of Corruption. The Agricultural increase so praised by DeLong and Cowen was the result of the Communist system of Education; which integrated the modern Concepts of Fertilization; the later bearing fruit only after Peasants were given a Percentage of the Profits. The average Chinese Peasant today knows more about Japanese Agricultural practice, than do most Western Agriculturalists. This later education most impelled the Agricultural advancement, but also the realization of the rural Youth that Urbanization was their best chance for advancement; resident agricultural land being overpopulated, and lacking in Transportation facilities.

The Deng system made an extreme mistake, which continues to this Day, in its concentration on foreign Trade; rather than on the development of internal Markets. They insisted that the Soviet-style industries provision internal Chinese consumption, and that the new Capitalization be devoted to expensive Goods provision for high-Standard of Living countries. The new Rich in China, mainly associated with Party bureaucrats or their Children, already demand Western Goods at excessive rate unsupported by Energy availability; while the Standard of Living of Workers are chained to the supply of Government industries and limited Western Goods.

Western Economists miss one important element in Chinese Standard of Living evaluations: the fact they include the massive Savings rate of Chinese Workers. They ignore that Chinese leadership functionally forbids both a high level of Consumption, and alternative methods of Savings and Investment. Chinese Banks limit Loans to Party bureaucracy and its clients, and these loans lack collateral and effective Repayment schedules. Subtraction of Worker Savings from the equation (not far-fetched, as major Withdrawals seem unlikely) leaves Workers dependent upon their current Wages; Retirement system, Health Care, and increased Consumption remain distant goals. A Recession in the Developed Nations causing a cutback in Imports, will leave China in the same situation as the Mao Era.

I pity China, which already has Rural Movement to the Cities, where the Unemployed increase by an estimated 30 million per year. It is no accident that the new China Rich are moving their Investments into the West and Developed nations. Economists suggest that China is solving their Problems; I would suggest Chinese leadership only delays destruction from these Problems, until they can move their families to the West. lgl