Derek Scissors, China’s Stall; Testimony submitted to the House Committee on Foreign Affairs, Subcommittee on Asia and the Pacific for the hearing 'China’s Rise.' American Enterprise Institute, June 17, 2009.
www.aei.org/wp-content/uploads/2015/06/Scissors-Testimony.pdf
Quote:
(a) "It is often forgotten that changes in economic policy can require years to make an impact. Recalling this is important in understanding China’s economic trajectory. The most common
description today is that China is slowing. In fact, it is stagnating.
(b) "Stagnation does not translate to China becoming unimportant, and certainly not to a collapse. China bulls often criticize bears for predicting a crisis that never occurs.[footnote 2] As a long-time bear, I have never predicted an economic collapse. The reason: a mixed market-state economy is less vulnerable to an acute crisis and more vulnerable to chronic, serious problems. The Communist Party can control the economy and has overwhelming motivation to avoid a crisis. While an economic stall is hardly appealing, it is both less terrifying to the Party and harder to avoid.
(c) "Demography also argues for stagnation and against collapse. Demography can cause social and political crisis when there are too many young people and not enough jobs. China is aging, instead, and the challenge for aging societies is not riots but stasis.
(d) "It is certainly also the case that a stagnant China will remain large and important. [Think Russia]
(e) "In the post-war era, the most impressive economic success stories are in East Asia, which seems to bode well [for China]. However, Japan became rich by global standards before World War II and its burst of growth 1946-1990 was in large part regaining previously held ground. * * * The only country with a population over 30 million [thus excluding the other three tigers] that has become rich for the first time in the post-war era is South Korea.
(f) "China’s economic problems have been brewing for quite a while. They did not begin this year or last, as some seem to think. They did not even begin with the financial crisis. They began in 2003. * * * In 2003, a then-new government under Communist Party General Secretary Hu Jintao decided that state-owned banks lending to state-owned enterprises should lie at the core of the economy, so that these badly-run firms could continue to employ large numbers of people and serve as economic tools for the Party. * * * The dependence on investment and huge imbalance between investment and consumption was not always a feature of the economy, it was created by the Hu regime * * * And at first it seemed to work. * * * This was in no small part, however, a mirage. Behind the glitter was not the greater productivity * * * but increasing dependence on domestic credit to finance investment and on foreign consumption to buy the goods ultimately produced.
(g) "In 2003, the government identified 3 industries as suffering overcapacity; in 2013, that number had ballooned to 19.
(h) "There are two complementary and powerful consequences [when an entity uses debt to stimulate (a company, an economy)]. First, when a country has already spent so much, the return on yet more spending is low. This is the main reason growth is slowing. Second, when a country’s debt is so large, a good deal of capital is spent paying it back. This is the main reason growth will slow further. There are other reasons. [One is population aging and shrinking work force that comes with it.] In addition, growth based on natural resources has disappeared. In the 1980’s, farm productivity soared, permitting what were unnecessary farmers to become manufacturing workers and helping create the world’s new factory. Land and natural resources will not spur economic growth again for the foreseeable future, as China has badly depleted its resource endowment. Illustrations of this range from arable land to zinc deposits, but perhaps the clearest is water [whose supply dwindles and is polluted].
(i) "The government recognizes all this but its strategy is exactly wrong. * * * The policies that support innovation are also deeply flawed. Intellectual property even within China is not protected well, reducing the incentive to innovate. Continued regulatory protection of state-owned enterprises (SOEs) means the private sector is simply not allowed to succeed in the two dozen industries that SOEs dominate, which also reduces the incentive to innovate.
(j) "Reform to the Rescue? * * * Greater labor mobility could mitigate aging’s blow to growth by letting the right workers move freely to the right jobs. China still discourages labor mobility by denying education, pension and other benefits to those living and working in the 'incorrect' place. * * * The state sector is the clearest area of reform failure. The Party’s pledges here go in precisely the wrong direction. Rather than shrinking the state sector to make room for private competition, they call for private investment in SOEs and state-led projects. This is essentially an attempt at a private bailout of the public sector’s mistakes. Further, rather than being allowed to fail or be sold off, SOEs are being merged with each other to get even bigger. There is no sign of the market being given a decisive role in the corporate sector, quite the opposite. This error affects innovation. Beijing sees super-large SOEs as offering advantages in competition overseas. But faced with no competition at home, these firms have no reason to innovate.
(k) "China began to wander off the market path in 2003 and has not yet returned. Unless it does, growth will halt by the end of this decade, regardless of what the government claims. * * * An indispensable, if perhaps boring, step [for US] is to avoid making the same mistake made with the Soviet Union, whose decline was missed until very late. The U.S. needs a concerted effort to compile statistics on the Chinese economy that are as independent as possible of those published under the [Communist] Party’s auspices.
Note:
(a)
(b) "Japan became rich by global standards before World War II"
Well, that depends on the definition of “rich.” Most everybody, including me, thinks Japan was poor when stacked up against US -- and thus ill advised to confront the latter in World War II.
(i) The Briton Angus Maddison calculated data for 1913 and 1950, but not years in between.
(A) list of regions by past GDP (PPP) per capita
https://en.wikipedia.org/wiki/List_of_regions_by_past_GDP_(PPP)_per_capita
(1913 in 1990 International Dollars: France (3,485), Germany (3,648), Italy (2,564), UK (4,921), former USSR (1,488), US (5,301), Japan (1,387), China (552) )
(B) list of regions by past GDP (PPP)
https://en.wikipedia.org/wiki/List_of_regions_by_past_GDP_(PPP)
(1913 in millions of 1990 International Dollars: France (144,489), Germany (237,332), Italy (95,487), UK (224,619), former USSR (232,351), US (517,383), Japan (71,653), China (241,431) )
(ii) The only research paper:
Kyōji FUKAO 深尾 京司, Debin MA 馬 徳斌 and Tangjun YUAN 袁 堂軍, Real GDP In Pre-War East Asia: A 1934–36 Benchmark Purchasing Power Parity Comparison with the US. Review of Income and Wealth, 53: 503–537 (2007)
http://onlinelibrary.wiley.com/d ... 1.2007.00243.x/full
(Table 8. 1934–36 East Asian Per Capita GDPs in 1934–36 US Dollars and Relative to the US (574.7,100%), Japan (180.8 or 31.5% of America's), Taiwan (129.6 or 22.6%), Korea (70.9 or 12.3%), China (63.6 or 11.1%) )
* This China excludes Manchuria and (outer) Mongolia.
* Take notice this paper used “1934–36 US Dollars” -- rather than Maddison's "1990 international dollars." The " international dollars" in economics is another way to say "US dollars." (There is a Wikipedia page for that.)
(c) "GDP is wildly overrated as a measure of economic success. For one thing, it makes no sense to use GDP per person, since no one can spend it. In terms of what people actually have in their pockets, China reported disposable income per person equivalent to $3360 at the end of 2014 (the US figure was $41,180). Plainly, there is a long way to go."
(i) Grossly “disposal income” is defined similarly around the world. The devil (or nuance) is in the detail.
(ii) John Ruser, Adrienne Pilot and Charles Nelson, Alternative Measures of Household Income: BEA Personal Income, CPS Money Income, and Beyond.
www.bea.gov/about/pdf/AlternativemeasuresHHincomeFESAC121404.pdf
Quote:
(a) "Personal income is the income received by persons from participation in production, from government and business transfer payments, and from government interest. Personal income includes income received by non-profit institutions serving households, by private non-insured welfare funds, and by private trust funds. Income from production is generated both by the labor of individuals and by the capital that they own. Private income not earned in production, such as from capital gains or the sale of assets, is excluded. Personal income is calculated as the sum of wage and salary disbursements, employer contributions for employee pension and insurance funds, proprietors’ income, property income (personal interest, dividend and rental income), and transfer payments to individuals, less personal contributions for social insurance. Disposable personal income is personal income less personal tax payments. While personal income does not include capital gains realized through the sale of assets, personal income taxes do include the taxes paid for these capital gains.
(b) "Unlike BEA’s measure of personal income, CPS money income excludes employer contributions to government employee retirement plans and to private health and pension funds, lumps-sum payments except those received as part of earnings, certain in-kind transfer payments—such as Medicare, Medicaid, and food stamps—and imputed income." page 6
* BEA = Bureau of Economic Analysis, US Department of Commerce
* CPS is Current Population Survey, conducted by Census Bureau, US Department of Interior.
* This essay attempted to explains the difference of personal income collected by BEA and "money income" collected by Census Bureau.
(d) "From the end of 2011 to the middle of 2014 (latest available), China’s net private wealth grew 10 percent, total. World wealth grew 17 percent; far from being world-leading, China underperformed. * * * Private wealth is also only part of the story, especially in China where the state owns so much in the way of assets."
The operative word here is "private," not national (which is GDP).
(e) " In a smaller economy, China’s broad money supply M2 is now no less than 75% larger than America’s."
(i) no less than: "used before a number or amount for saying that it is the lowest possible <The hamburgers should contain no less than 50% meat>"
www.macmillandictionary.com/us/dictionary/american/no-less-than
(ii) M2
(A) M2 is "a measure of the money supply." en.wikipedia.org (where M stands for "money" -- there are different definitions of money, depending on liquidity)
(B) Sarwat Jahan and Chris Papageorgiou, What Is Monetarism? Finance & Development, 51: _ (2014)
www.imf.org/external/pubs/ft/fandd/2014/03/basics.htm
("Today, monetarism is mainly associated with Nobel Prize–winning economist Milton Friedman")
Luckily for you, you need not learn it in further details. See next.
(C) What Is the Money Supply? Is It Important? Federal Reserve, undated (under the heading "Current FAQs; Informing the public about the Federal Reserve").
www.federalreserve.gov/faqs/money_12845.htm
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发表于 1-28-2016 10:29:44
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