The Chinese Communists to embrace Free Market Capitalism more than President Obama

Posted by PITHOCRATES - December 21st, 2013

Week in Review

During the Eighties Democrats said the Japanese economy was the smart way to go.  Government partnering with business.  With government helping to make that messy capitalism more ordered and manageable.  Improving economic efficiency.  And economic output.  But all that government intervention and cronyism brought on a deflationary spiral.  Japan’s Lost Decade.  Which they’re still trying to recover from.

Over the last decade Democrats said the Chinese economy was the smart way to go.  Government partnering with business.  With government helping to make that messy capitalism more ordered and manageable.  Improving economic efficiency.  And economic output.  But it doesn’t appear the Chinese agree with them (see China factories stuck in cruise control by Charles Riley posted 12/15/2013 on CNNMoney).

After a long period of steady progress and faster growth, China’s factories have lost some momentum in the final months of the year…

…analysts said that sluggishness in the manufacturing sector suggests economic growth has started to weaken, a trend that will continue into next year…

China’s party leaders have spent much of the year plotting a course for economic reform that aims to deliver results by 2020.

Beijing’s plan calls for opening its financial markets and promoting greater foreign investment. The leadership also hinted at changes in how companies file for stock market listings, the introduction of a bank deposit insurance scheme and an acceleration of interest rate liberalization.

The roadmap seeks to roll back government control of state-owned enterprises and allow for greater competition with private firms.

The Chinese export economy created economic activity.  But the key to that was their low labor costs.  With the power of the state keeping labor costs low.  Which helped to make their exports inexpensive.  But it did not help grow a middle class.  Which meant all of China’s economic growth relied on those exports.  And when nations were suffering anemic economic growth those export sales fell.  And without a prosperous middle class there was nothing to replace those sales.  Causing the Chinese economy to lose momentum.

And what is China doing to regain that momentum?  Reduce the role of government in the economy.  Unlike President Obama.  Which could forever change the balance of power in the world.  For if the Chinese privatize their economy while the Americans strangle theirs with more government involvement the Chinese economy will grow greater and overtake the American economy.  Allowing the Chinese communist do something the Soviets could never do.  Beat America economically.  Because the Chinese communists embraced free market capitalism more than President Obama.

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