https://www.scmp.com/rss/9534/feed James A. Dorn is a senior fellow and China specialist at the Cato Institute. From 1984 to 1990, he served on the White House Commission on Presidential Scholars. He has been a visiting scholar at Fudan University. He holds a PhD in economics from the University of Virginia. en https://assets.i-scmp.com/static/img/icons/scmp-meta-1200x630.png https://www.scmp.com On October 1, 1949, Mao Zedong proclaimed the founding of the People’s Republic of China before a huge crowd in Tiananmen Square. After three years of gruelling civil war with the Nationalists under the command of Chiang Kai-shek, Mao had emerged as the victorious head of the world’s largest communist country. During his tenure as chairman of the Communist Party, until his death in 1976, Mao ruled with an iron fist. He imitated the Soviet system of central planning, outlawed capitalism and... https://www.scmp.com/comment/opinion/article/3030839/why-china-70-needs-listen-voices-those-it-silenced?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3030839/why-china-70-needs-listen-voices-those-it-silenced?utm_source=rss_feed Mon, 30 Sep 2019 06:00:14 +0000 The massive demonstrations in Hong Kong against the proposed extradition bill have revealed the moral rectitude of citizens to protect their way of life and freedom from communist China. On June 9, hundreds of thousands exercised their right to peacefully contest the legislation supported by Chief Executive Carrie Lam Cheng Yuet-ngor. By putting moral and political pressure on government, the people succeeded in reversing the course of the bill, which was suspended on June 15 and declared “dead”... https://www.scmp.com/comment/opinion/article/3020897/if-protesters-want-protect-hong-kongs-way-life-they-must-win-war?utm_source=rss_feed https://www.scmp.com/comment/opinion/article/3020897/if-protesters-want-protect-hong-kongs-way-life-they-must-win-war?utm_source=rss_feed Thu, 01 Aug 2019 22:00:10 +0000 Beijing's decision to allow more flexibility in the daily trading band for the yuan-dollar exchange rate, along with the announcement that the People's Bank of China will soon allow banks to pay higher interest rates on deposits, are positive signs that the leadership is serious about giving markets more play. Ending financial repression, however, will require political as well as economic reform. Free markets rest on institutions that protect private property rights and allow the free flow of... https://www.scmp.com/comment/article/1456943/no-truly-free-market-china-without-free-exchange-ideas?utm_source=rss_feed https://www.scmp.com/comment/article/1456943/no-truly-free-market-china-without-free-exchange-ideas?utm_source=rss_feed Tue, 25 Mar 2014 11:00:30 +0000 People's trust in government erodes when there is no genuine rule of law to limit the power and scope of the ruling elite. The latest breach of trust in China is the discovery that more than 40 per cent of the rice supply in Guangzhou was tainted with cadmium, a toxic metal. The socialist idea that "power resides in the people" is a mantra without substance. The truth is that leaders in the Chinese Communist Party and their crony capitalists are still above the law. The lack of an effective... https://www.scmp.com/comment/insight-opinion/article/1252143/why-china-needs-its-critics?utm_source=rss_feed https://www.scmp.com/comment/insight-opinion/article/1252143/why-china-needs-its-critics?utm_source=rss_feed Sun, 02 Jun 2013 16:00:00 +0000 After US Secretary of State Hillary Rodham Clinton's announcement that new economic sanctions would be placed on North Korea, one headline read: 'US tightens the screws on North Korea's economy.' Yet, Pyongyang has already tightened the screws on its own economy. The chaos created by last year's currency 'reform' and by the crackdown on market activities is evident in food shortages, spiralling prices and discontent. Small traders had taken advantage of opportunities for profitable exchange... https://www.scmp.com/article/720718/let-market-thrive-so-people-can-too?utm_source=rss_feed https://www.scmp.com/article/720718/let-market-thrive-so-people-can-too?utm_source=rss_feed Tue, 27 Jul 2010 16:00:00 +0000 Nien Cheng, the author of Life and Death in Shanghai, died in Washington on November 2 at the age of 94. She was an incredibly courageous woman and the embodiment of grace and wisdom. She loved traditional Chinese culture, but her world was shattered on August 30, 1966, when Red Guards ransacked her home and, on September 27, arrested her. She spent the next 6 1/2 years in Shanghai's No1 Detention House, in solitary confinement. Communist Party interrogators accused Cheng of being a spy,... https://www.scmp.com/article/698368/era-upheaval-author-stood-against-storm?utm_source=rss_feed https://www.scmp.com/article/698368/era-upheaval-author-stood-against-storm?utm_source=rss_feed Sat, 14 Nov 2009 16:00:00 +0000 The Sino-US Strategic and Economic Dialogue sought to find areas of mutual interest so that both countries could co-operate on economic, security, environmental and foreign-policy issues. Nothing of substance came out of the meeting, but a 'Memorandum of Understanding' was signed to further consider environmental and energy policy, and participants discussed steps needed to rebalance the two economies in the interest of global prosperity and to avoid destructive protectionism. Economic policy... https://www.scmp.com/article/688387/socialist-market-virus-threatens-us-and-china?utm_source=rss_feed https://www.scmp.com/article/688387/socialist-market-virus-threatens-us-and-china?utm_source=rss_feed Thu, 30 Jul 2009 16:00:00 +0000 Near the end of his term in office US president George W. Bush said: 'I'm abandoning free-market principles to save the free-market system.' But he had already significantly increased the size and scope of the federal government. His last act was to bail out General Motors and Chrysler. That trend is continuing in spades under President Barack Obama and the democratic majority in Congress. Federal spending in fiscal 2009 will approach 28 per cent of gross domestic product, and the US budget... https://www.scmp.com/article/682158/socialism-us-style?utm_source=rss_feed https://www.scmp.com/article/682158/socialism-us-style?utm_source=rss_feed Sun, 31 May 2009 16:00:00 +0000 China's massive stimulus programme is being fuelled by an unprecedented increase in bank lending. More credit has been extended in the first quarter of 2009 than for all of 2007, and bank lending is growing by nearly 30 per cent on an annual basis compared to about 15 per cent in October 2008. That lending spree reflects an ultra-easy monetary policy with both the monetary base (currency plus bank reserves) and broad money (M2) growing at more than 25 per cent a year. The excessive growth of... https://www.scmp.com/article/677588/excess?utm_source=rss_feed https://www.scmp.com/article/677588/excess?utm_source=rss_feed Tue, 21 Apr 2009 16:00:00 +0000 A key topic at the G20 meeting is sure to be the future of the dollar as an international reserve currency. The global financial crisis, which started with the US subprime crisis, has eroded confidence in the dollar as an anchor for international payments. Moreover, large US fiscal deficits could add more than US$10 trillion to US government debt over the next decade - on top of trillions of dollars of implicit debt in social security and Medicare. The US debt bomb poses a growing risk to China... https://www.scmp.com/article/675436/dangers-new-global-reserve-currency?utm_source=rss_feed https://www.scmp.com/article/675436/dangers-new-global-reserve-currency?utm_source=rss_feed Wed, 01 Apr 2009 16:00:00 +0000 In a recent interview with the Financial Times, Premier Wen Jiabao expressed his admiration for Adam Smith's Theory of Moral Sentiments, written in 1759, before his better-known treatise The Wealth of Nations (1776). What the premier took away from the book is the idea that a society in which wealth is concentrated in a few hands will be unstable and immoral. Such a society, however, is more likely to be illiberal than liberal. There are two organising principles of society: first, consent, the... https://www.scmp.com/article/671319/unlocking-potential?utm_source=rss_feed https://www.scmp.com/article/671319/unlocking-potential?utm_source=rss_feed Thu, 26 Feb 2009 16:00:00 +0000 The US Treasury's takeover of Fannie Mae and Freddie Mac, the nation's largest mortgage financers, was predictable. The drive for profits while housing prices were rising, and the expectation that the federal government would not let these market-socialists fail, allowed Fannie and Freddie to accumulate a huge portfolio of mortgages and mortgage-backed securities. Now that the asset price bubble in housing is being deflated and Fannie and Freddie's capital is shrinking, the Fed is compelled to... https://www.scmp.com/article/652678/what-price-stability?utm_source=rss_feed https://www.scmp.com/article/652678/what-price-stability?utm_source=rss_feed Sun, 14 Sep 2008 16:00:00 +0000 The spectacular choreography in the opening and closing ceremonies at the Beijing Olympics leaves the impression that China can accomplish anything, including becoming the world's largest economy. But organising a sports contest and achieving sustainable development - in the liberal sense of widening the range of individual choice - are different: the first depends on planning, the second on freedom. In a sports contest there is a winner and a loser; it's what economists call a 'zero-sum game'.... https://www.scmp.com/article/650771/olympian-task?utm_source=rss_feed https://www.scmp.com/article/650771/olympian-task?utm_source=rss_feed Fri, 29 Aug 2008 16:00:00 +0000 The US subprime crisis has some valuable lessons for China, the foremost being that market socialism is no magic wand for wealth creation. When the US Congress created Fannie Mae and Freddie Mac, the two giant mortgage-financing companies, and gave them the status of 'government-sponsored enterprises', the stage was set for a major moral hazard problem. By creating for-profit joint stock companies, with an implicit guarantee that Washington would step in if they were in distress, the two... https://www.scmp.com/article/649471/polluted-markets?utm_source=rss_feed https://www.scmp.com/article/649471/polluted-markets?utm_source=rss_feed Sun, 17 Aug 2008 16:00:00 +0000 After 30 years of economic liberalisation and rapid growth, China is now the world's third-largest trading nation and the fourth-largest economy. In a new study for the Carnegie Endowment for International Peace, Albert Keidel, a former US treasury official, predicts that, by 2035, China will be the world's largest economy and, by 2050, will grow to twice the size of the US economy. In 'China's Economic Rise: Fact and Fiction', Dr Keidel dispels myths about China's rise and presents a strong... https://www.scmp.com/article/646852/caveats-reform?utm_source=rss_feed https://www.scmp.com/article/646852/caveats-reform?utm_source=rss_feed Sun, 27 Jul 2008 16:00:00 +0000 Powerful US House Democrats have expressed their scepticism with the latest round of the US-China Strategic Economic Dialogue, which ended last week. Congressional critics of US-China economic policy complain that little progress has been made on substantive issues such as 'currency manipulation' since the dialogue began, in 2006. Some would even go so far as to end the dialogue altogether. That would be a mistake. As the head of China's delegation, Vice-Premier Wang Qishan noted, in his... https://www.scmp.com/article/642678/nows-not-time-end-us-china-economic-dialogue?utm_source=rss_feed https://www.scmp.com/article/642678/nows-not-time-end-us-china-economic-dialogue?utm_source=rss_feed Mon, 23 Jun 2008 16:00:00 +0000 The terrible devastation caused by the earthquake in Sichuan reminds us of the randomness of nature, the uncertainty of life and the compassion people have for those who suffer. But there is a more important, if less understood, lesson: countries with well-developed markets, private property rights and a vibrant civil society are much more able to withstand and recover from natural disasters. Price and profit controls, and the lack of private property rights, increase the duration and magnitude... https://www.scmp.com/article/639140/disaster-protection?utm_source=rss_feed https://www.scmp.com/article/639140/disaster-protection?utm_source=rss_feed Mon, 26 May 2008 16:00:00 +0000 China's phenomenal rise since 1978 has resulted from economic liberalisation, not monetary ease. But it is still not a fully fledged market economy, and monetary policy is compromised by Beijing's reluctance to let market forces guide interest and exchange rates. In a world of mobile capital, using monetary policy to peg exchange rates makes it more difficult to control inflation. Real economic development requires stable money and economic freedom, which expand the range of choices open to... https://www.scmp.com/article/636924/yuan-peg-proving-costly-china?utm_source=rss_feed https://www.scmp.com/article/636924/yuan-peg-proving-costly-china?utm_source=rss_feed Thu, 08 May 2008 16:00:00 +0000 After several months of relative calm on Capitol Hill about US-China trade relations, leading House Democrats are making a noise. They are calling on the Bush administration to employ 'all available tools at its disposal to address China's protracted, large-scale intervention in the foreign exchange markets to maintain an undervalued currency'. In a five-page letter last week, Ways and Means Committee chairman Charles Rangel, and trade subcommittee chairman Sander Levin called for denying... https://www.scmp.com/article/632592/americas-protectionist-drift?utm_source=rss_feed https://www.scmp.com/article/632592/americas-protectionist-drift?utm_source=rss_feed Fri, 04 Apr 2008 16:00:00 +0000 There is a rising chorus from Washington and beyond warning about the risk that sovereign wealth funds - especially those of non-democratic governments - pose for US national security and 'economic sovereignty'. The chorus usually begins by praising the benefits of foreign investment, whether private- or state-directed, but ends by singing a different tune. Senator Evan Bayh, chairman of the Senate Banking Subcommittee on Security and International Trade and Finance, argues: 'Occasionally,... https://www.scmp.com/article/629049/sovereign-wealth-paranoia?utm_source=rss_feed https://www.scmp.com/article/629049/sovereign-wealth-paranoia?utm_source=rss_feed Fri, 07 Mar 2008 16:00:00 +0000 For 30 years, China has been making progress in transforming from a planned economy to a market economy. Most prices are now set by demand and supply, China is the world's third-largest trading nation and private property is constitutionally recognised. Nevertheless, important remnants of central planning and control remain, which impede Beijing's proclaimed goal of 'people-centred development'. The biggest weakness in the 11th Five-Year Programme (2006-10), no longer called a 'plan', is the... https://www.scmp.com/article/624583/mainland-risks-return-central-planning-mindset?utm_source=rss_feed https://www.scmp.com/article/624583/mainland-risks-return-central-planning-mindset?utm_source=rss_feed Sun, 27 Jan 2008 16:00:00 +0000 As US Treasury Secretary Henry Paulson attends the third annual strategic economic dialogue in Beijing, the leading contender for the Democratic nomination for president, Senator Hillary Rodham Clinton, has argued that the United States is experiencing 'a slow erosion' of its 'economic sovereignty'. Like her colleague Senator Charles Schumer, she is particularly concerned about China's rising economic might and its implications for US economic and national security. In the just-released report... https://www.scmp.com/article/619373/nationalistic-barriers?utm_source=rss_feed https://www.scmp.com/article/619373/nationalistic-barriers?utm_source=rss_feed Wed, 12 Dec 2007 16:00:00 +0000 When the 17th Communist Party congress convenes next month, President Hu Jintao will be confronted with some serious challenges. Foremost will be to ensure steady economic growth and price stability. Inflation is now at a 10-year high, reaching 6.5 per cent last month, as measured by the consumer price index (CPI). Actual inflation is probably much higher, given the defects of the index, which does not accurately reflect the consumption pattern of the present market-oriented system. Housing... https://www.scmp.com/article/609456/inflation-threat-hus-harmonious-society?utm_source=rss_feed https://www.scmp.com/article/609456/inflation-threat-hus-harmonious-society?utm_source=rss_feed Thu, 27 Sep 2007 16:00:00 +0000 Lao Tzu, thought to have been an older contemporary of Confucius (551-479BC), may have been the first libertarian. In writing the Dao De Jing he argued that if governments followed the principle of wu-wei (non-action), social and economic harmony would naturally emerge and people would prosper. The essence of this liberal vision is concisely stated in Chapter 57: 'The more restrictions and limitations there are, the more impoverished men will be ... The more rules and precepts are enforced,... https://www.scmp.com/article/606631/chinas-legacy-thoughts-lao-tzu?utm_source=rss_feed https://www.scmp.com/article/606631/chinas-legacy-thoughts-lao-tzu?utm_source=rss_feed Mon, 03 Sep 2007 16:00:00 +0000 We can never live in a perfectly safe world, but we can approach product safety in an intelligent manner by weighing the costs and benefits of improving safety standards. What nations should not do is allow the quest for safety to turn into disguised protectionism. According to United States Ambassador Alan Homer, special envoy for China and the Strategic Economic Dialogue, 'safety requires continuous improvement, but it's important that any government policies in this area ... not be... https://www.scmp.com/article/603366/open-and-accountable?utm_source=rss_feed https://www.scmp.com/article/603366/open-and-accountable?utm_source=rss_feed Tue, 07 Aug 2007 16:00:00 +0000 A crescendo of voices on Capitol Hill is calling for retaliation against China for 'cheating' on its trade commitments and for undervaluing its currency. Senator Byron Dorgan, a Democrat from North Dakota, has even introduced a bill to end normal trading relations with China. The presumption is China must be 'cheating' - and doing so at the expense of US jobs - because the American bilateral trade deficit with China continues to reach new highs. To 'level the playing field' and correct the... https://www.scmp.com/article/591123/ties-blind?utm_source=rss_feed https://www.scmp.com/article/591123/ties-blind?utm_source=rss_feed Mon, 30 Apr 2007 16:00:00 +0000 China's record trade surpluses with the United States are not pleasing to the US Congress or to the many China hawks on Capitol Hill. There has been little movement in the yuan-dollar exchange rate since it was revalued in July last year. Pressure is mounting to bring the Schumer-Graham bill - which would impose duties on Chinese imports - to the floor for a vote in the autumn. Prohibitive tariffs, however, will not correct the trade imbalance. Rather than going down the path of destructive... https://www.scmp.com/article/561256/trade-surplus-doesnt-make-enemy?utm_source=rss_feed https://www.scmp.com/article/561256/trade-surplus-doesnt-make-enemy?utm_source=rss_feed Tue, 22 Aug 2006 16:00:00 +0000 The US Congress' latest attack on private property has come at the expense of Unocal shareholders who have lost at least US$1 billion because of CNOOC's decision to drop its bid, due not to market forces but to political pressure from Capitol Hill. Chevron is the clear winner, with its bid of about US$17.6 billion, but the damage done to US-China relations and to the free flow of investment funds in global capital markets could be substantial. By politicising the takeover market and weakening... https://www.scmp.com/article/511004/abuse-free-market?utm_source=rss_feed https://www.scmp.com/article/511004/abuse-free-market?utm_source=rss_feed Thu, 04 Aug 2005 16:00:00 +0000 China's refusal to let market forces determine the foreign exchange value of the yuan and to liberalise capital markets has meant that the People's Bank of China must continue to accumulate foreign reserves. Official reserves now stand at more than US$514 billion, compared with less than US$350 billion only 18 months ago. With most of those reserves held in US government bonds, there is an increasing risk of substantial losses to the Chinese economy as the US dollar loses its international... https://www.scmp.com/article/483834/dont-sink-us-dollar-china?utm_source=rss_feed https://www.scmp.com/article/483834/dont-sink-us-dollar-china?utm_source=rss_feed Fri, 31 Dec 2004 16:00:00 +0000 Since 1970, Hong Kong has ranked as the world's freest economy. In the latest Economic Freedom of the World annual report, Hong Kong remains at the top. The report, published by the Fraser Institute in conjunction with the Cato Institute and other think-tanks around the world, ranks countries on their adherence to a set of policies that measure the degree of economic freedom. Those that safeguard property rights, enforce contracts, allow free trade, maintain low marginal tax rates, ensure... https://www.scmp.com/article/463585/still-worlds-freest?utm_source=rss_feed https://www.scmp.com/article/463585/still-worlds-freest?utm_source=rss_feed Sun, 18 Jul 2004 16:00:00 +0000 It is widely assumed that to be effective, foreign aid should be linked to a needy country adopting sound institutions and policies. That belief lies behind the decision by the administration of George W. Bush to set up the New Millennium Challenge Account, intended to increase aid by 50 per cent in the coming years. However, in a new study in the Cato Journal, Harold Brumm, a government economist, finds that 'foreign aid has a negative growth effect even where economic policy is sound'. He... https://www.scmp.com/article/455343/trade-not-aid?utm_source=rss_feed https://www.scmp.com/article/455343/trade-not-aid?utm_source=rss_feed Tue, 11 May 2004 16:00:00 +0000 One of the greatest liberals of the last century, F.A. Hayek, wrote his classic The Road to Serfdom 60 years ago to warn against the dangers posed by post-war socialism. He believed with David Hume that 'it is seldom that liberty of any kind is lost all at once'. To stem the growth of big government and the erosion of economic and personal freedom that accompanies that growth, Hayek argued passionately for a liberal international order grounded in limited government, free trade and the rule of... https://www.scmp.com/article/447693/how-hong-kong-can-build-great-society?utm_source=rss_feed https://www.scmp.com/article/447693/how-hong-kong-can-build-great-society?utm_source=rss_feed Wed, 10 Mar 2004 16:00:00 +0000 Thirty-five years ago this month, the 'Great Helmsman' Mao Zedong disbanded the Red Guards, who were causing chaos. Although Mao recognised his mistake of giving students virtually free rein to terrorise the populace, he did not abandon his utopian vision of a socialist state, nor did he end his ruthless suppression of 'capitalist roaders' and other so-called bad elements during the Cultural Revolution. Deng Xiaoping, himself a victim of the Cultural Revolution, rose to lead the Communist... https://www.scmp.com/article/422885/new-mantra-china-seek-truth-freedom?utm_source=rss_feed https://www.scmp.com/article/422885/new-mantra-china-seek-truth-freedom?utm_source=rss_feed Fri, 25 Jul 2003 16:00:00 +0000 Many problems plague China's 'market-socialist' economy, especially the inefficiency of state-owned enterprises, the large number of non-performing loans held by the four big state-owned banks, high unemployment and widespread corruption. If the leadership's goal is to achieve sustainable growth, those problems must be tackled. What is needed is institutional change that expands the role of the market and reduces the misallocation of resources endemic to the state sector. China's leaders have... https://www.scmp.com/article/411668/could-chinas-treaty-obligations-backfire-world?utm_source=rss_feed https://www.scmp.com/article/411668/could-chinas-treaty-obligations-backfire-world?utm_source=rss_feed Sun, 06 Apr 2003 16:00:00 +0000