In The Comments Again

Reading Martin Jacques this morning I find this.

The east Asian countries have never subscribed to the neoliberal economic agenda, eschewing sweeping privatisation, a minimalist role for the state and wholesale market liberalisation. At the centre of Chinese policy remains a highly interventionist state and state-owned firms. Lin himself has written that the government is the most important institution, determining whether development is successful, and argues that privatisation is neither necessary nor sufficient for making Chinese state-owned enterprises more efficient. Imagine such sentiments being expressed by the Bush or Clinton administrations, or Gordon Brown for that matter.

It looked a little odd, as the way in which the Chinese have grown th economy over the decades is to freeze the State owned companies and allow private sector ones to grow up around them. The faster growth rate of those private companies has meant that the percentage of GDP controlled by the State has been declining.

Fortunately, in comments, there\’s this:

Ummm, no. Actually. It is true that neo-liberal economics is not uniform across the East Asian region. Japan is still highly regulated although a lot less than it used to be. South Korea is less so and becoming even less so with time. But both have seen massive privatisations including Japan National Rail in 1987 which I believe was the biggest privatisation in the history of the world. Japan Telegraph and Telephone was privatised in 1985. Japanese Highways were privatised. I believe that Japanese Post is about to be.

Nor China is not a highly interventionist state. There have been massive privatisations in China as well – more so than in Britain. The American government spend more on health care than China does. The Chinese State own enterprises are all but dead in the economy. It is true that China\’s big manufacturer Haier is part owned by the State but probably not for long. Essentially all growth in China is the result of the private sector – which is more or less unregulated. The Chinese state simply does not have a clue what is going on in the Chinese economy.

All the states in this region remain reasonably minimalist in terms of their share of GDP. Japan is the lowest among the Developed nations. China\’s is under 15 percent of GDP.

So given that first claim is utterly factually incorrect, what is the point of the rest of the article?

Glory be for the division of labour and specialisation: I don\’t need to repeat that demolition of the basic suppositions of Jacques\’ piece, I can simply copy it.

4 thoughts on “In The Comments Again”

  1. Shame the rebuttal is bollocks, then. There’s no clear-cut boundary between “public” and “private” in China in the way the commenter describes, nearly all the “privatised” ex-public sector companies retain enormous public sector stakes, and nearly all private businessmen larger than whelk-stall owners are closely linked to the local party – if they weren’t, then they would find it effectively impossible to function.

    Oh, and the biggest “private sector” investment fund is the property wing of the Red Army…

  2. So Much For Subtlety

    I am unconvinced that this is actually the case.

    China is an enormous sink for FDI. Now some of that money is Chinese money that is exported, usually illegally, to Hong Kong and then re-invested in China to avoid regulation and tax, but a lot of it is not. There are an enormous number of Taiwanese, Hong Kong and South East Asian companies investing in China for instance. I assure you they are not owned by the Party.

    It is true that a lot of “Privately owned companies” are not entirely free of Party control or investment – but that is not Party control as such, it is local Party official control. Essentially the Party, the State and the People’s Liberation Army are privatising themselves. Rather than controlling business, they are using their offices to muscle their way in on the private sector which is where their pensions lie.

    The Chinese State genuinely does not know what is going on in the economy. That part is right. Their figures are nonsense, the local Party officials lie to them, they have no control over what anyone really does.

  3. but that is not Party control as such, it is local Party official control. Essentially the Party, the State and the People’s Liberation Army are privatising themselves.

    Potato potahto. I see where you’re coming from, but I don’t think you can categorise a country where private wealth is primarily owned by whichever local party boss managed to nick the title deeds as “private sector” in any meaningful Western sense of the term [see also: Russia].

    (also, PLA not Red Army, sorry. It would be very odd indeed if the Red Army was the biggest property owner in China…)

  4. I don’t think you can categorise a country where private wealth is primarily owned by whichever local party boss managed to nick the title deeds as “private sector” in any meaningful Western sense of the term [see also: Russia].

    But then again, that’s not exactly a description of “a highly interventionist state and state-owned firms” in any meaningful Western sense either, which was the point of the article writer.

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