Kenneth Pomeranz writes:
The reasons for China’s economic boom remain disputed. Chinese economic policy has changed repeatedly while high growth rates have continued. Commentators are clearer on what hasn’t happened than on what has: there has been only limited privatisation (as there was in 1990s Russia), no full embrace of factor markets (land can’t be privately owned; labour mobility is restricted by an internal passport system; capital markets are anything but transparent), and much less political liberalisation than some predicted. Despite the current slowdown – which has slashed stock market and real estate values that had long been suspiciously high, and is causing a cascade of debt problems in over-leveraged firms and local government development agencies – there is still a reasonable chance of China experiencing several more years of growth that would be high by almost any other country’s standards. So the basic questions remain: how long can the boom go on, and should we expect the durable institutions that emerge from it, if there are any, to resemble Western ones?