Over at Scholar’s Stage there’s a very good post with the mildly hyperbolic title: ‘Everything Is Worse in China.’ That essay focused on conservative lamentations about American society, and made the case that almost all those issues are worse in the PRC. I noticed an oblique interconnection with something
You mention real estate is perhaps not the most efficient use of Chinese savings, but don't state why. I've heard this elsewhere but never heard a good alternative. China is already the world's factory, and the largest consumer of nearly every commodity. It has the largest car market in the world, etc, etc. It doesn't seem like the 'real' economy is choked of funding. From what I read, China still has a lot of work to do to catch up in a few select industries (microprocessors, industrial agriculture), but even there the bottleneck is likely human talent/knowledge, not capital. So at the end of the day, whatever gets more housing units built is probably a wise use of funds. Imagine if America 'overbuilt' before today's regulatory and cost bloat set in.
'One of the most widely cited phrases on this issue is from Xi Jinping himself, who said “Houses are for living, not for speculation.” ... Xi has championed an innovation-oriented economic growth strategy, and as he and the Politburo undoubtedly know, increasing business and individual attention and investment in real estate—or mere asset appreciation generally—facilitates neither innovation nor factor productivity enhancement. In fact, it can systematically undermine TFP and innovation-oriented growth.'
Someone like Michael Pettis will argue, though—and I think he's probably right—that until the PRC rebalances its income distribution and fosters consumption-led growth, opportunities for productive investments and healthy growth will be limited irrespective of savings allocations.
Great piece! I think you might want to use the word "furnish" where you use the word "burnish." One means give, the other means polish.
You mention real estate is perhaps not the most efficient use of Chinese savings, but don't state why. I've heard this elsewhere but never heard a good alternative. China is already the world's factory, and the largest consumer of nearly every commodity. It has the largest car market in the world, etc, etc. It doesn't seem like the 'real' economy is choked of funding. From what I read, China still has a lot of work to do to catch up in a few select industries (microprocessors, industrial agriculture), but even there the bottleneck is likely human talent/knowledge, not capital. So at the end of the day, whatever gets more housing units built is probably a wise use of funds. Imagine if America 'overbuilt' before today's regulatory and cost bloat set in.
I do state why!
'One of the most widely cited phrases on this issue is from Xi Jinping himself, who said “Houses are for living, not for speculation.” ... Xi has championed an innovation-oriented economic growth strategy, and as he and the Politburo undoubtedly know, increasing business and individual attention and investment in real estate—or mere asset appreciation generally—facilitates neither innovation nor factor productivity enhancement. In fact, it can systematically undermine TFP and innovation-oriented growth.'
Xi Jinping would love to funnel savings away from real estate and into advancing his already massive industrial policy strategy: https://dusselpeters.com/CECHIMEX/Naughton2021_Industrial_Policy_in_China_CECHIMEX.pdf
Someone like Michael Pettis will argue, though—and I think he's probably right—that until the PRC rebalances its income distribution and fosters consumption-led growth, opportunities for productive investments and healthy growth will be limited irrespective of savings allocations.
you may also find this research interesting https://editorialexpress.com/cgi-bin/conference/download.cgi?db_name=CICF2018&paper_id=915