Capitalism with Chinese characteristics is not a bad thing


The Chinese Communist Party conducted a charming movement in the United States. In all the stories about the silence of tennis stars, the #MeToo scandal, the disappearance of billionaires, and Uyghur concentration camps, Americans have also begun to hear about Beijing’s efforts to reduce inequality and create healthier and more balanced economic growth.China’s “Common Prosperity” The news has been filtered through mainstream TV shows, such as CBS and 60 Minutes in national newspapers.

Although there are reasonable doubts about a poor human rights record, a history of debt-driven growth, and whether a ruling class with vested interests in the old system can implement better policies, the United States still has important lessons. We should learn from China’s efforts—especially focusing on quality rather than quantity in terms of growth.

In the past few years, this has involved banking reforms, local government debt restructuring, Antitrust measures against large technology companies And, recently, tried Eliminate the real estate bubble. The troubled real estate giant China Evergrande may collapse and take away the rest of the industry, but I have to admire Beijing by identifying problematic companies and doing what the United States did not do before the subprime mortgage crisis before the collapse, and Try to release bubbles before they destroy other economies.

Staying away from speculation and debt has significantly inhibited growth. This is not a bad thing. In a recent research report, macro investor and China expert William Callanan, founder of Syzygy Investment Advisory, stated that these efforts represent a kind of “quantitative tightening” as an increase from quantity to quality (higher wages and more Focus on sustainability) part of the transformation). Although some fiscal stimulus measures were added before China’s 20th Party Congress to be held next fall, this is not, as TS Lombard said in a note, “typical Chinese stimulus measures”, but a ” The “Better Advance” plan focuses on areas such as clean energy, smart infrastructure and digital economy.

It’s all part The country strives to create a “dual circular” economy based on a greater degree of self-reliance and “independent innovation”, Aimed at improving productivity and wages in high-growth industries. Although some people think this is China’s own version of American nationalism decoupling, I think it is a very meaningful strategy for Beijing. The world’s second largest economy should consider how to create a new economic ecosystem specifically for its future.

For various reasons, from geopolitics to the environment, it is wise to link local production with growing local demand.It creates a more resilient and redundant supply chain and enables manufacturers to move up the economic food chain faster because Numerous studies show.

China actually learned this Iterative manufacturing and U.S. industrial policy. Interestingly, the most innovative companies in the United States, such as Tesla (complete control of its own supply chain), have never given up on this model. More will follow; a recent McKinsey survey of global supply chain managers found that nearly 90% of respondents expect future production to be more regional and localized.

The last lesson the United States may learn from China’s joint prosperity efforts is the importance of holding business leaders personally responsible for misconduct. Obviously, an authoritarian state has done a great job in this regard, lest it go too far-needless to say, putting corrupt business leaders into the Gulag without even trial is detrimental to human rights and investor confidence. Washington has another restriction. Unlike Beijing, it cannot simply require large technology companies to pay their fair share of taxes; it must pass legislation requiring it to do so.

But it is a good thing to send illegal executives to jail after a fair trial, and to check the company’s excesses before a crisis occurs. China has recently made some improvements in investor protection programs and securities laws. In November, Kangmei Pharmaceutical, one of the largest listed drugmakers in China, was convicted of fraud and had to pay investors US$387 million. Chairman Ma Xingtian, his wife and four former senior executives were held accountable for personal financial responsibility, and Ma himself was sentenced to prison.

In the countless financial crises and corporate scandals in recent years, have many American executives received the same treatment? Of course, this has been one of the main restraints of left and right populists in recent years-“no one goes to jail.”It might be like this Tighten the political and business elite This is the biggest challenge facing the United States and China in the future.

Of course, liberal democracies have more transparent court systems and free news media to help ensure that they do so. Politicians are still responsible to voters, no matter how polarized the voters are. At the same time, China has cleared the way for Chairman Xi Jinping, regarded by many as the next Mao Zedong, to become a lifelong leader. Beijing’s “common prosperity” efforts have their merits. But the fact that cannot be concealed is that the Communist Party itself is still the biggest market risk in China.

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