1/12
After listing a series of quite specific economic steps and goals proposed during the Two Sessions, this front page People's Daily article turns to rebalancing, about which it says: "Committed to expanding domestic demand as a strategic...
en.people.cn/n3/2021/0311/c…
After listing a series of quite specific economic steps and goals proposed during the Two Sessions, this front page People's Daily article turns to rebalancing, about which it says: "Committed to expanding domestic demand as a strategic...
en.people.cn/n3/2021/0311/c…
2/12
move, China will step up efforts to develop the Internet economy, encourage the consumption of physical goods, explore new models of services consumption, and scale up support to manufacturers."
move, China will step up efforts to develop the Internet economy, encourage the consumption of physical goods, explore new models of services consumption, and scale up support to manufacturers."
3/12
It is striking that all of these recommendations are supply-side measures that will, at best, boost the efficiency of consumption. None of them will help actually rebalance demand towards consumption because none of them delivers a greater share of income to...
It is striking that all of these recommendations are supply-side measures that will, at best, boost the efficiency of consumption. None of them will help actually rebalance demand towards consumption because none of them delivers a greater share of income to...
4/12
households (unless this is what they mean when they say later that Beijing will "act on the new development philosophy".
In an Odd Lots podcast I did 3 weeks ago (released today) @tracyalloway asks me why Beijing finds it so hard to implement...
bloomberg.com/news/audio/202…
households (unless this is what they mean when they say later that Beijing will "act on the new development philosophy".
In an Odd Lots podcast I did 3 weeks ago (released today) @tracyalloway asks me why Beijing finds it so hard to implement...
bloomberg.com/news/audio/202…
5/12
demand-side policies rather than supply-side policies. I think this is something we really need to understand if we want to project China's growth and adjustment trajectories.
The answer, I would argue, is that the paths a country can follow are heavily constrained...
demand-side policies rather than supply-side policies. I think this is something we really need to understand if we want to project China's growth and adjustment trajectories.
The answer, I would argue, is that the paths a country can follow are heavily constrained...
6/12
by existing institutions. Albert Hirschman was especially sensitive to these types of problems. He argued that after many years of a "successful" economic model, a country develops a whole series of powerful institutions – social, political, legal, financial, and so...
by existing institutions. Albert Hirschman was especially sensitive to these types of problems. He argued that after many years of a "successful" economic model, a country develops a whole series of powerful institutions – social, political, legal, financial, and so...
7/12
on – around which political and economic power is formally and informally structured. These institutions won't adjust quickly and frictionlessly to whatever new model the government or the IMF try to impose unless it directly benefits them. That's why there is always...
on – around which political and economic power is formally and informally structured. These institutions won't adjust quickly and frictionlessly to whatever new model the government or the IMF try to impose unless it directly benefits them. That's why there is always...
8/12
significant resistance to reforms, and perhaps why they usually fail.
Take Russia's "shock therapy" reforms in the 1990s, for example. In principle these reforms made economic sense, but I'd argue that they assumed – incorrectly – that Russian institutions could adjust...
significant resistance to reforms, and perhaps why they usually fail.
Take Russia's "shock therapy" reforms in the 1990s, for example. In principle these reforms made economic sense, but I'd argue that they assumed – incorrectly – that Russian institutions could adjust...
9/12
quickly and efficiently to the new conditions. But because they couldn't, the result was political and economic chaos. The same happened in Latin America in the late 1980s and early 1990s, when the LDC crisis forced them to adopt the "Washington Consensus" reforms.
quickly and efficiently to the new conditions. But because they couldn't, the result was political and economic chaos. The same happened in Latin America in the late 1980s and early 1990s, when the LDC crisis forced them to adopt the "Washington Consensus" reforms.
10/12
For reforms not to be politically disruptive, they must fit into existing institutions, and they must evolve in ways that do not threaten current relations of politcal and economic power. This seems to be what happened in Meiji Japan, and even in post-Mao...
For reforms not to be politically disruptive, they must fit into existing institutions, and they must evolve in ways that do not threaten current relations of politcal and economic power. This seems to be what happened in Meiji Japan, and even in post-Mao...
11/12
China, although not without seriously disruptive periods in either case.
Even though we pretty much know what China must do to rebalance domestic demand sufficiently to keep the economy growing quickly (redistribute at least 2-3 percentage points of GDP every year...
China, although not without seriously disruptive periods in either case.
Even though we pretty much know what China must do to rebalance domestic demand sufficiently to keep the economy growing quickly (redistribute at least 2-3 percentage points of GDP every year...
12/12
from elites and local governments to ordinary households), it doesn't mean it will be easy to do if it also involves – as it must – a significant transfer of formal and informal economic and political power.
from elites and local governments to ordinary households), it doesn't mean it will be easy to do if it also involves – as it must – a significant transfer of formal and informal economic and political power.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
