China can chart its own course
- By John Ross
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E-mail China.org.cn, June 27, 2013
Guancha: How do you evaluate an economist?
John Ross: Economics is not a game played by manipulating logic. It should make a clear assessment of the reality and the future, though, of course, no one can predict all the details of this with absolute certainty and only the main trends can be foreseen. But unfortunately there are too many Chinese economists who shy away from making a straightforward assessment and they refuse to talk about economic data and the reality of the situation. They choose instead to show off their liberal "principles." Such "economists", as they never make testable predictions, violate the rules of science that any theory must be subject to test by facts so it can be shown to be correct or mistaken. For this reason they cannot be considered genuine economists. They should learn from Milton Friedman and make clear statements based on hard data.
Guancha: What is your quantitative assessment of China's economic future?
John Ross: Based on its record, China can maintain a growth rate of 9 percent in the initial period, and can maintain a growth rate of 8 percent for the next 20 years - the reduction of 1 percent is because the demographic dividend has ended. This means that in 12 to 15 years, China's GDP per capita will match that of Eastern European nations. After this, the longer term goal will of course be to match the economies of Western Europe and the U.S. in terms of GDP per capita.
Guancha: How should China address the present economic slowdown?
John Ross: The global slowdown is an indisputable fact. Almost all Asian countries around China will find themselves in an economic slowdown, but neo-liberal ideas cannot deal with this problem. Neo-liberal economists believe that because the West developed successfully, neo-liberal ideas must, by that measure, be correct - but unfortunately the West did not actually apply them in its own development! However, as we can see, Western countries are now mired in economic stagnation or recession. The apparent recent slow recovery of the U.S. economy has given heart to these neo-liberal economists, but they are in for a harsh reality check.
Extreme left-wingers, on the other hand, take up simplistic, anti-Western positions and I will not agree with them. They should, instead, ensure that they have a thorough understanding of economic data, as this is the only way in which they can establish a clear and viable economic plan.
We can agree that the government should play a leading role in maintaining growth, but the question of how much investment and in what areas it should be invested requires precise and considered answers. The decrease in demand from overseas markets means that more stimulation of China's domestic economy is needed, but too much stimulation will lead to inflation and consequently compromise stability. Precise data must be considered when policy is being decided.
The article was originally published on Guanchan.cn and translated by Zhang Lulu and checked against the original English by John Ross.
