The Cato Institute’s Dan Mitchell offers promise for the Chinese economy and explains Reagan’s Chinese echo.
China’s economy has hit a speed bump. The stock market’s recent performance has been less than impressive and economic growth has faltered.
Is this the beginning of the end of the Chinese miracle?
If you asked me about six months ago, I would have expressed pessimism. The government was intervening in financial markets to prop up prices, and that was after several years of failed Keynesian-style spending programs that were supposed to “stimulate” growth.
But maybe my gloom was premature.
Mr Xi has seemed to channel the late American president. He has been speaking openly for the first time of a need for “supply-side reforms”—a term echoing one made popular during Reagan’s presidency in the 1980s.
It is now China’s hottest economic catchphrase (even featuring in a state-approved rap song, released on December 26th: “Reform the supply side and upgrade the economy,” goes one catchy line). …Mr Xi’s first mentions of the supply side, or gongjice, in two separate speeches in November, were not entirely a surprise. For a couple of years think-tanks affiliated with government ministries had been promoting the concept (helped by a new institute called the China Academy of New Supply-Side Economics).
Dr. Mitchell also warns about a potential recipe for IMF induced stagnation.
If you want to know a recipe for Chinese stagnation, simply look at the IMF’s recommendations.
Finally, Dan explains,“Some Chinese officials have a very astute understanding of why welfare states don’t work.”
Is Xi Jinping the Chinese Ronald Reagan?