I hear again & again how effective the Chinese state is. That's a myth. Some get that idea because of China's rapid growth in recent decades & the pace of infrastructure development. But both are misleading. MORE
As to infrastructure, it's much easier to build stuff when you don't have to worry about civil society or economic logic. Some of it has been very helpful to the economy. Some is just built to pump up GDP or promote certain industries. MORE
As to growth, the role of the state is overblown. The reason why China has developed so quickly is due to the energy of the private sector (both local & foreign investment). The state tends to hold things back rather than promote healthy growth. MORe
Fact is the state sector is far less productive than the private but for political reasons state enterprises receive far too much of the economy's resources - ie most bank finance goes to SOEs while private companies are starved of funds. MORE
Because the government favors the weaker rather than stronger parts of the economy, the results are terrible productivity gains & a build up of debt. Then the govt won't reform because it doesn't want to lose control over key sectors. MORE
Chinese industrial policies aren't so effective either. They tend to create massive excess capacity, waste & debt without much innovation. The state is now involved tech advancement that would be better left to private companies. MORE
Meanwhile many govt services are awful. The healthcare system is a catastrophe & policymakers won't allow much scope for private players. Holding onto the one-child policy for too long has created a demographic disaster. MORE
Then the Chinesse govt does a poor job of following its own laws. Regulations are applied selectively & erratically. That's one reason why there is so much environmental damage in the country. MORE
So don't be fooled if you walk through a shiny Beijing airport terminal. There's a lot more to being an "effective" govt than building buildings & China fails on most fronts.
