Beijing doesn’t know when to stop – or even how to do so
After years of furious building and investment in rust-belt industries, mainland China and its centrally planned economy is facing a looming financial crisis. But what can be done to avoid it?
In an unusual move, President Xi Jinping summoned the country’s finance industry watchdogs and ordered them to take stock of risks and uphold regulatory vigilance, reflecting his deep concern about the dangers facing the mainland economy.
SCMP, April 28
When people tout the virtues of a centrally planned economy as opposed to one shaped by the blind vagaries of market choice there is one compelling argument they can always adduce. It gets things done. Do we want 20 hydroelectric dams built? Consider them built. Do we want 40 new cement plants? Turn around. There they are. When you want mountains moved you want a central planner to run things.
I concede this advantage of central planning to Singapore and Shanghai any time that they wish to claim it. The Hong Kong way with lots of argument and filibuster and multi-year delays while people talk and talk and talk just doesn’t cut it on the get-things-done-now scale.
But there are two crucial questions that central planning does not address, in fact, does not even consider. They are:
(1) How can a small claque of leaders know for an entire economy what it is specifically that people really want to do?
(2) How can they know when to stop doing it?