… is from page ix of Adam Posen’s Preface to Nicholas Lardy’s superb 2019 book, The State Strikes Back: The End of Economic Reform in China?:
Rightly and powerfully, Nicholas Lardy argues that China’s economic trajectory is far from predestined. Instead, the Chinese state’s policy choices will be the major determinant of its future growth. The slowdown of recent years [since 2012] is not primarily the natural slowing of what is now a more mature, upper middle-income country. It reflects the increasing drag of state companies on economic growth and the burgeoning misallocation of resources by China’s financial sector. If China’s leadership continues to opt for state-led growth in pursuit of greater economic and political control, China’s growth trend would slow further. Alternatively, if China’s leadership goes back to a market-oriented reform program, that would boost China’s trend growth to well above the pace of recent years.
DBx: So true. And yet economic illiterates such as Sen. Marco Rubio (R-FL) insist that the U.S. economy is threatened by some imaginary strenghening of China’s economy that will be the inevitable result of the Chinese economy’s turn away from markets. And these illiterates propose, as a means of countering this phantom ‘threat,’ that the U.S. mimic China’s move away from markets and toward state direction of the economy.