Title: Reading China's Economy
Author: Justin Yifu Lin
Publisher: China Times Publishing
Published: March 2009
How long can mainland China main- tain its high rate of growth? International opinion is polarized on the issue, with one group very upbeat about long-term prospects and another distinctly pessimistic. Some people characterize the difference of opinion as an economic version of Pride and Prejudice.
Two books representative of the opposing camps have recently been published in Taiwan: Reading China's Economy and The Writing on the Wall: China and the West in the 21st Century. The two authors look at the same data and ask the same questions, but come to very different conclusions.
Why is the divergence so great? Even those who normally don't read books on economics may find a comparison of the two books interesting.
Ultimately, is "socialism with Chinese characteristics," which was introduced on the mainland with the reforms of 1978, workable? In 30 years, the Chinese economy has grown 14.8 times-or seven times Deng Xiaoping's prediction that it would quadruple. At the end of 2008, as a financial crisis spread throughout the world, China held foreign reserves of nearly US$2 trillion. It would therefore seem that those who are bullish on its future should be able to declare at least a temporary victory.
A global "economic ice age" followed the financial tsunami. To keep the sudden collapse in exports from creating an army of unemployed workers that could wreak social chaos, China has turned its focus to increasing domestic demand so as to "protect eight" (maintain 8% growth). Yet in the first quarter of 2009 China's economy expanded at only a 6.1% annual rate. Those pessimistic about China's future prospects have pointed to the figure, arguing that the era of high growth in China is at an end.
If the situation is subdued on the domestic front, China has been on the attack internationally, upbraiding the US as the "chief culprit" of the financial tsunami and calling for a basket of currencies to replace the US dollar as the world's reserve currency. The move has sparked a lot of discussion about the relative merits of the "Beijing consensus" vs. the "Washington consensus." Many, including the China pessimists, have once again raised the specter of the "China threat."
The debate between the two sides is at this juncture focused on one issue: "How long can China maintain its high rate of economic growth?" These two books present sharply differing points of view in their approach to the question, which reflect their different answers to "big questions" about China's economic contradictions.