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Tuesday, November 23, 2010

China’s State-Planned Economy Is Doomed to Flop: David Pauly

A quick synopsis of his article below.  Follow the link at the bottom to read the whole thing. It is an excellent op-ed piece for those who fear China's economic model will one day rule the world!
The biggest obstacle to China becoming the world’s No. 1 economy is China.
The communist nation’s determination to keep as tight a rein on its economy as it has on its citizens will lead to failure -- just as it has for other countries that embraced central planning schemes.
The nation’s state-owned companies are buying up independent businesses in the auto, steel and energy industries. A government-run company even plans its own Internet search business to compete with Baidu Inc., whose shares trade on stock exchanges.
As it moves away from free markets, China ignores two recent central-planning failures.
Remember Japan Inc.? Thirty years ago, pundits said Japan’s economy would rule the world as its bureaucrats allocated capital to key industries, protecting them from foreign competition. The U.S. railed against Japan’s manipulation of the yen to keep its exports moving -- just as today it moans about China keeping the yuan low.
China won’t collapse tomorrow. Its exports continue to flood the globe, earning it money to make major investments -- and amass political clout -- abroad. But don’t let so-called experts fool you into thinking China has discovered a new and better way to organize an economy. State-run capitalism is an oxymoron.
(David Pauly is a columnist for Bloomberg News. The opinions expressed are his own.)
To contact the writer of this column: David Pauly in Fort Myers, Florida,

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