1/6
Interesting article. it seems that the State Council has announced a pilot program designed to give markets a “decisive role” in the allocation of land, labor, capital, entrepreneurship, and technology.
caixinglobal.com/2022-01-07/chi…
Interesting article. it seems that the State Council has announced a pilot program designed to give markets a “decisive role” in the allocation of land, labor, capital, entrepreneurship, and technology.
caixinglobal.com/2022-01-07/chi…
2/6
This includes, according to Caixin, liberalizing restrictions on land use and supply, restrictions on labor mobility created by the hukou system, and restrictions on capital markets. Basically Beijing wants all factors of production to be allocated by market needs.
This includes, according to Caixin, liberalizing restrictions on land use and supply, restrictions on labor mobility created by the hukou system, and restrictions on capital markets. Basically Beijing wants all factors of production to be allocated by market needs.
3/6
While this makes a lot of sense in principle, I'd argue that until there is a major redistribution of income, along with the associated transformation of political institutions, these reforms really cannot be implemented without a very sharp fall in the economy's growth rate.
While this makes a lot of sense in principle, I'd argue that until there is a major redistribution of income, along with the associated transformation of political institutions, these reforms really cannot be implemented without a very sharp fall in the economy's growth rate.
4/6
The reason, after all, for high levels of "non-market" allocation is the need to invest large amounts of savings into non-productive property and infrastructure projects. Only this way can Beijing achieve the high growth rates the economy cannot otherwise deliver.
The reason, after all, for high levels of "non-market" allocation is the need to invest large amounts of savings into non-productive property and infrastructure projects. Only this way can Beijing achieve the high growth rates the economy cannot otherwise deliver.
5/6
But high investment is the automatic counterpart to low consumption, which is itself the consequence of distorted income distribution. This is just arithmetic, and without government support, the private sector would never get involved in these investments.
But high investment is the automatic counterpart to low consumption, which is itself the consequence of distorted income distribution. This is just arithmetic, and without government support, the private sector would never get involved in these investments.
6/6
I'd argue that the non-market allocation of factors of production is not an unfortunate accident that has accompanied the country's growth model. It is a fundamental part of the growth model.
ft.com/content/907740…
I'd argue that the non-market allocation of factors of production is not an unfortunate accident that has accompanied the country's growth model. It is a fundamental part of the growth model.
ft.com/content/907740…
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