It is all too easy to envy China. At current growth rates, the Chinese economy will double in size in only nine years, raising an estimated 100 million people above the poverty line in the process. Compare this to the major economies of the Western world. The eurozone’s GDP remains mired below 2008 levels, and the United States last enjoyed Chinese-style growth back in 1984, when gasoline was $1.10 a gallon and the first Apple Macintosh was rolling off the production line in California. There is a risk that the lack of growth in the West may make economic transformation in the direction of the Chinese model appear more urgent to its governments. But the Western economic model has brought about unprecedented standards of living By contrast, China’s rapid growth should not obscure its need for economic change. According to the International Monetary Fund, at some point between 2020 and 2025, China will pass what economists call the “Lewis Turning Point,” at which a country’s vast supply of low-cost workers is exhausted and factors such as labor mobilization provide a diminishing contribution to growth. As China’s recent experience with WMPs demonstrates, economic change can expose old problems and create new ones. Ironically, China’s transformation from a state-directed to a market-driven economy may require the greatest amount of planning of all.
Posted on: Fri, 14 Jun 2013 03:40:44 +0000
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