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Originally posted by cestmoi at 2008-11-24 04:31
It is pointless discussing that.
Going forward, let us hear from mainland Chinese some suggestions on what can be done to turn things around, some original thoughts and ideas would be nice.
I don't know much about macroeconomics, but I always feel our gov rely too much on the crudest form of macro-control, ie., increasing or reducing fixed investments in infrastructures.
local goverments always have this urge to get money from central and increase investments while not caring too much if they are really needed or if they are top priority. cuz infrastructure investments are quick to yield results, and quite visible results too. if you ever read articles about the history of chinese fixed investments by gov, you will know how much inefficiency and curruption has been going on in that area.
in mid 1990s, when premier zhu announced to put a stop to out of control fixed investments by local gov, thousands of huge projects are abandoned halfway. it's been always such a cycle, local takes every possible means to get central to approve their investment plan, once central approve these projects become bottomless pits, local will find every possible reason to squeeze addtional investments from central or prior investments will become stranded costs. once central give way soon everything will be out of control, facing the danger of inflation, central once again has to cut them off in the middle.
i'm not saying gov shouldn't take financial measures to save the economy, i think gov should focus more on projects that can yield more in the long run, for example, support for medium and small investments in private sectors, transforming and upgrade of existing enterprises, establish more small cities and towns to enhance unbanization level, etc. granted some initiatives have been taken in this regard, but i don't think they are nearly enough, and local officials scarcely pay attention to them as they are complicated comparing to building a highway and don't have quick and visible results. so here once again bureaucratic politics has kept macro-control from being effective.
after only 30 years of reform and opening up, china is facing the problem of insufficient internal demand, how can it be with such a huge internal market? our gov has to downsize at all levels, giving a bigger share of national income to private sectors, and focus on rural area problems, once the rural area market is activated, china will continue to grow at high speed for another 50 years!