[lbo-talk] Foreign investment in China

Michael Pollak mpollak at panix.com
Thu Nov 12 03:49:16 PST 2009


I'm a little baffled by this post by Krugman:

http://krugman.blogs.nytimes.com/2009/11/05/the-lost-generation/

And as Matt points out, the giant success story in the developing

world was China, where the driver was the end of Communism -- not

modern finance. Actually, it's even more absurd to give finance the

credit than Matt realizes: China has not been experiencing net

inflows of capital, partly because it has maintained capital

controls, effectively insulating itself from the whole finance

thing.

<end quote>

"China has not been experiencing net inflows of capital?" I'm totally down with the argument that China disproves rather than proves the Washington Consensus because it broke every rule in the book. But I thought this came from harnessing FDI, not excluding it. I could swear that China has been one of top destinations for FDI for years. No?

And mind you, Krugman's not talking about the last year in this post, he's talking about the last 25 years. And it's not a passing point, but one he returned the next day as a kind of gotcha.

What am I missing here?

Michael



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