Comments on Shiro Armstrong and Tom Westland "Escaping the middle income trap", 30/03/2016
Some comments point out some unsaid issues, including what a new Asia order would look like and how to bring that peacefully.
While I am an economist as opposed to international strategist, I would venture a hypothesis that the best scenario for a new Asia order to appear peacefully would be for China to work not only for its own interests but also for the interests of all Asian countries, so that Asia is truly for all Asians as a whole, irrespective for China to confront the US or not.
The underlying assumption is that Asians will benefit from a new Asia order.
If you don’t look after your neighbours, they will not support you in your endeavours.
I think that will need China to make some hard decisions and choices, including to make some compromises and perhaps sacrifices in the process for it to rise as a true and powerful leader in Asia. America will naturally fade from Asia or its assumed uncontested leadership in Asia will be diluted, in that process.
It will be wise for China if it can do that. I think there will be enough wise people in China for it to realise that is the best option forward.
Showing posts with label economic development. Show all posts
Showing posts with label economic development. Show all posts
2016-03-30
2015-12-22
"Win-win" easy said than done
Comments on Daniel Poon "China sets out its FOCAC focus in Africa", 20/12/2015
I agree with the author for the following: “A central challenge remains in devising a ‘win–win’ institutional mechanism that can contribute to the dynamic growth objectives of both China and its partner countries over time.”
Further, while financing is obviously important, money itself alone is unlikely to be enough to resolve institutional issues.
China should not assume that its model can be easily applicable to or adopted by those partner countries.
China now has a very strong central leadership with great visions. It requires equally strong bureaucratic capacity to realise those visions. They need to act with strong motivation and incentive in the interests of the country, as opposed to simply follow orders. Under the current political environment, it is not completely certain such capable bureaucrats exist in China.
I am not arguing that Chinese bureaucrats are not capable, I would question whether they are willing to take risks when it is necessary to do so.
PS: There are two issues China needs to pay close attention. Firstly, China should uphold very high lending standard in approaching the "One belt one road" initiative and be very careful so that it will not fall into the same trap of the sub-prime lending crisis in the US before the GFC, on an international scale.
Secondly, the "top down" or "top designing" nature of the "one belt one road" strategy/initiative, if not handled carefully, could develop into very political in China. As a result, China must guard so to avoid any tendency into a politically driven campaign. While it is very remote, political campaigns run the risk to repeat the disastrous, costly and painful lessons of the Great Leap Forward.
Further: What I meant is reflected in the following quotation from an article by Gong Fangbin (公方彬), a professor at the Chinese Defence University: “国家开展强力反腐以来，有一个现象引起了各方关注：即不出事也不做事。这个问题不解决，反腐的意义和作用就会大打折扣。”
It means: “Since the strong national anti corruption drive, there has been one phenomena that is the concern of many: Don’t do anything at all, so you don’t look like you are doing anything corrupt”
His article, in Chinese, can be seen: http://news.sina.com.cn/zl/zatan/blog/2015-12-23/10255170/2994662287/b27eeb8f0102wh3h.shtml
I agree with the author for the following: “A central challenge remains in devising a ‘win–win’ institutional mechanism that can contribute to the dynamic growth objectives of both China and its partner countries over time.”
Further, while financing is obviously important, money itself alone is unlikely to be enough to resolve institutional issues.
China should not assume that its model can be easily applicable to or adopted by those partner countries.
China now has a very strong central leadership with great visions. It requires equally strong bureaucratic capacity to realise those visions. They need to act with strong motivation and incentive in the interests of the country, as opposed to simply follow orders. Under the current political environment, it is not completely certain such capable bureaucrats exist in China.
I am not arguing that Chinese bureaucrats are not capable, I would question whether they are willing to take risks when it is necessary to do so.
PS: There are two issues China needs to pay close attention. Firstly, China should uphold very high lending standard in approaching the "One belt one road" initiative and be very careful so that it will not fall into the same trap of the sub-prime lending crisis in the US before the GFC, on an international scale.
Secondly, the "top down" or "top designing" nature of the "one belt one road" strategy/initiative, if not handled carefully, could develop into very political in China. As a result, China must guard so to avoid any tendency into a politically driven campaign. While it is very remote, political campaigns run the risk to repeat the disastrous, costly and painful lessons of the Great Leap Forward.
Further: What I meant is reflected in the following quotation from an article by Gong Fangbin (公方彬), a professor at the Chinese Defence University: “国家开展强力反腐以来，有一个现象引起了各方关注：即不出事也不做事。这个问题不解决，反腐的意义和作用就会大打折扣。”
It means: “Since the strong national anti corruption drive, there has been one phenomena that is the concern of many: Don’t do anything at all, so you don’t look like you are doing anything corrupt”
His article, in Chinese, can be seen: http://news.sina.com.cn/zl/zatan/blog/2015-12-23/10255170/2994662287/b27eeb8f0102wh3h.shtml
2015-08-24
China's economic development and its institutions
Comments on Paul Hubbard "If Mao still ran China, China would still be poor", 24/08/2014
While most of Paul Hubbard's arguments in this post may be correct (particularly in regarding the Mao era model) and that includes the title particularly, the point on the middle income trap is a bit confusing, particularly in the context of using the US institutions as a reference point. This is because the high income levels are themselves vastly different from the entry point ($US 12,616 or more on 1/07/2014 by World Bank) to the highest level ($103,050 for Norway), or even the level of the US ($55,200). China's income level was $7,380 then.
Yes, it can be expected China will continue to improve governance and carry out further and possibly continual reforms over the years and decades ahead. But that is very different to catch up with the institutions in the US.
It is possible that China may enter into the ranks of high income countries in a decade. Its institutions, however, can be reasonably expected to be still very different from that of the US's. Further, there is the debate whether China's development and economic growth represents a new and different model, presumably different from that of the US's.
While so far it is difficult to prove the China model, it cannot be completely ruled out at this stage either. It may takes much more time (likely to be several more decades) to prove or disapprove a China model.
While most of Paul Hubbard's arguments in this post may be correct (particularly in regarding the Mao era model) and that includes the title particularly, the point on the middle income trap is a bit confusing, particularly in the context of using the US institutions as a reference point. This is because the high income levels are themselves vastly different from the entry point ($US 12,616 or more on 1/07/2014 by World Bank) to the highest level ($103,050 for Norway), or even the level of the US ($55,200). China's income level was $7,380 then.
Yes, it can be expected China will continue to improve governance and carry out further and possibly continual reforms over the years and decades ahead. But that is very different to catch up with the institutions in the US.
It is possible that China may enter into the ranks of high income countries in a decade. Its institutions, however, can be reasonably expected to be still very different from that of the US's. Further, there is the debate whether China's development and economic growth represents a new and different model, presumably different from that of the US's.
While so far it is difficult to prove the China model, it cannot be completely ruled out at this stage either. It may takes much more time (likely to be several more decades) to prove or disapprove a China model.
2015-08-18
China may break the some of the rules of classical economic development
Comments on Indermit Gill and Homi Kharas "Can Asia keep growing through middle income?" 18/08/2015
While Malaysia and Thailand may have been on the middle income list for some time and might be considered as potential victims of middle income trap, China has not been in the ranks of middle income for that long. I am not sure the case of Indonesia given that it has been a democracy for some times already. It is likely to be premature to say that China is a contender for middle income trap, even though China is still under an authoritarian regime.
There is no doubt that China will continue to reform itself on many fronts, it has not shown serious reforms to be a democracy any time soon. It is likely it will remain authoritarian for any foreseeable future. In such a political context, if it falls into the middle income trap, the main political system may be cited as the main reason. However, if it succeeds in graduating from middle income into the ranks of high income countries, one may have to find an exception to some of the institutional arguments.
China may indeed to be a different model of development. Of course we are now all speculate on the Chinese case, even though it may share some of the most important attributes that other successful East Asian high incomers, such as Japan, Singapore, Taiwan and Korea.
Those attributes include but not limited by high saving rates, strong political regimes, good primary and secondary educations, strong entrepreneurship including innovation, open and externally oriented economy and so on.
As for the argument of institutional factors, I think a stable and predictable political system and a gradually reforming to increase efficiency at the national level may be the key, as opposed to a defined western style institutions.
While Malaysia and Thailand may have been on the middle income list for some time and might be considered as potential victims of middle income trap, China has not been in the ranks of middle income for that long. I am not sure the case of Indonesia given that it has been a democracy for some times already. It is likely to be premature to say that China is a contender for middle income trap, even though China is still under an authoritarian regime.
There is no doubt that China will continue to reform itself on many fronts, it has not shown serious reforms to be a democracy any time soon. It is likely it will remain authoritarian for any foreseeable future. In such a political context, if it falls into the middle income trap, the main political system may be cited as the main reason. However, if it succeeds in graduating from middle income into the ranks of high income countries, one may have to find an exception to some of the institutional arguments.
China may indeed to be a different model of development. Of course we are now all speculate on the Chinese case, even though it may share some of the most important attributes that other successful East Asian high incomers, such as Japan, Singapore, Taiwan and Korea.
Those attributes include but not limited by high saving rates, strong political regimes, good primary and secondary educations, strong entrepreneurship including innovation, open and externally oriented economy and so on.
As for the argument of institutional factors, I think a stable and predictable political system and a gradually reforming to increase efficiency at the national level may be the key, as opposed to a defined western style institutions.
Subscribe to:
Posts (Atom)
Posts
