> The Dark Side of China's Rise
> By Minxin Pei
> March/April 2006
>
> China's economic performance since 1979,
> for example, is actually less impressive than
> that of its East Asian neighbors, such as Japan,
> South Korea, and Taiwan, during comparable
> periods of growth.
Oh dearie dear, where to begin. Japan, South Korea and Taiwan grew much less fast during their initial rural-to-urban transformation, in the 1900-1939 period.
> Its banking system, which
> costs Beijing about 30 percent of annual GDP in
> bailouts, is saddled with nonperforming loans and
> is probably the most fragile in Asia.
China’s banks have plenty of bad debt, which may amount to 25% of current GDP, but it doesn’t matter. The renminbi isn’t convertible, and the state owns a cool $809 billion in hard currency foreign exchange.
> comparison with India is especially striking. In
> six major industrial sectors (ranging from autos
> to telecom), from 1999 to 2003, Indian companies
> delivered rates of return on investment that were
> 80 to 200 percent higher than their Chinese
> counterparts.
The OICA says India produced 1.5 million autos and vehicles in 2004, while China produced 5 million. There’s no Indian equivalent to China’s Haier, TCL or Lenovo. India is in better economic shape than many Third World countries, but it’s not the next China just yet.
> bureaucratic constituencies. The World Bank
> estimates that, between 1991 and 2000, almost a
> third of investment decisions in China were
> misguided.
That’s infinitely better than the catastrophic investment decisions orchestrated by the World Bank and the neolibs in Latin America, sub-Saharan Africa, Russia and West Asia.
> The Chinese economy is not merely inefficient; it
> has also fallen victim to crony capitalism with
> Chinese characteristics-the marriage between
> unchecked power and illicit wealth.
Ah, the crony capitalism canard. It’s fascinating how the house intellectuals of the rentiers constantly project Wall Street’s own home-grown afflictions onto other countries.
> According to the World Bank, China's governance
> ranks in the bottom half of all the countries in
> the world.
And the World Bank is never wrong!
-- DRR