Sound Reasoning: Bawerk.net on the outlook for the Chinese economy

There are obviously limits to this kind of growth and China’s exponentially increasing debt load suggest they have more or less exhausted the easy route toward “progress”. The next stage, based on social capital accumulation, efficient (individualised) capital allocation, limited political and elite interference and human ingenuity and creativity, all tied together into an objective, law-abiding incentive structure is an impossible task for the current political structure. Making the leap usually fails, despite all the talk off the effectiveness stemming from centralised dictatorship, the only true source of economic growth comes from the individual.

We have seen it before, several times. It is exceedingly hard to manage the transition from a top-down economy based on foreign demand to one that grows organically from the individual level. It usually ends in a massive bust, before moving forward at a third of the speed experienced prior to the crisis.

I found this to be a good piece of analysis, and encourage you to read it.

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About Stebbing Heuer

A person interested in exploring human perception, reasoning, judgement and deciding, and in promoting clear, effective thinking and the making of good decisions.
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