Sunday, October 23, 2016

China stagnation?

Everyone's favorite question about China is: how long can they keep it [amazing growth] up? Performance following the Deng Xiaoping reforms has been unparalleled in world history. The Communist Party is still in charge and the standard view is that the Party and the population have struck a bargain: leave the vast Party apparatus in power and they will deliver ever rising standards of living. Again, for how long can the bargain work?

A good friend reminds me that there is something wrong with the first question. China is not a country but a continent. Many parts (the major cities) do quite well but, please, do not generalize about the whole continent. And generally speaking, cities do better that countries. Some coalitions are just too big.

On top of that, Blumenthal and Scissors think that the "bargain" is unsustainable. The country's debts are too high, official data releases cannot be trusted, the military and security establishment require constant care and feeding and will soon become unaffordable, the Deng-era reforms have stopped.

That's the bad news. The good news is that China's investments in education have been spectacular; education is serious and (from what I could tell) unfettered. Best of all, there are signs of a significant return talent migration.  I have seen this at both ends, talented Chinese leaving the U.S. to return home and (this visit) encountering some now in Shanghai who have returned from their U.S. sojourn and prospered..