Mandy @ POLI 333D

Just as (almost) everyone says that China is going to rule the world economy with its fast-growing economy, there comes the proof that the economy is not only slowing down, but also being “sluggish”.

According to CNN.:

“The country’s manufacturing sector shrank for a fifth month in a row, according to HSBC’s latest China PMI survey Wednesday. That follows news of weaker industrial output from January to February.

This news shows that Beijing’s policies to slow down the economy are in fact working. But Premier Wen Jiabao – who’s been the champion of those measures – may now be asking whether they’re working a bit too well.”

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I think it is smart of the government to slow down the economy. If you recall the Japanese economic miracle crash in the 1990s, you realize the risk of making another economic bubble. Although I am worried about potential of such crash, China’s successful (or accidental) socialist economic reform since 1987 has somehow assured me that China understands the art of gradualism when implementing reform strategies. In fact, I admire the first phase of China’s economic reform in the 1980s, in which the country applied the “dual-track” system by combing market and plan mechanisms. As such, the first phase had witnessed the scenario of “everyone wins” as the CCP’s power and resources were decentralized to local officials, who could implement better economic measures (than the CCP) in their locales, and as the labor sectors were given enough time to develop as the market was relatively shielded from international competition. The second phase of the economic reform that is happening now is less gradual than the first phase, thereby contributing to a widening income gap as the upper/middle-classes continue to prosper, while the lower-classes have marginal chance to elevate their socio-economic status. Despite I don’t think that China’s current economic control measures would help eliminate the income gap, I see them as having the potential to narrow the gap (a bit) by giving the society, and in particular the lower-classes, more time to adapt to the thriving economy while China is still able to maintain its growth rate of ~8%.

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