[lbo-talk] The Chinese stock market collapse in global context

Marv Gandall marvgand2 at gmail.com
Thu Aug 27 13:12:45 PDT 2015

Observers have been quick to blame China’s economic slowdown for the panic in global stock markets this past week, but Seamus Milne of the Guardian correctly notes that China is a “transmission belt rather than a motor” of the global crisis of capitalism which began with the 2007-08 financial crisis in the US.

"A dysfunctional model of capitalism, built on deregulation, privatisation and low wages, crashed and burned seven years ago. But the fallout from that crisis is still ricocheting around the world, from Europe to the ‘emerging economies’, as the attempt to refloat a broken model with cheap credit inflates asset bubbles and share buybacks – or enforce it with austerity – fuels new crises”.

The remnants of state planning and ownership introduced by the Chinese revolution have given it a greater capacity to cope with economic crisis, but what Milne describes as its “hybrid” model of a capitalist mixed economy hasn’t been enough to shield it from asset bubbles at home and stagnant growth in its major export markets in the US, Europe, and Japan. “China’s room for manoeuvre would certainly be much narrower if it had gone for the full deregulation and privatisation package” urged on it by these more mature capitalist economies and the international financial system under their control, Milne writes.


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