![The State Strikes Back: The End of Economic Reform in China? by [Lardy", "Nicholas R. ]](https://images-na.ssl-images-amazon.com/images/I/51elq7mGMxL._SY346_.jpg)
This is an interesting work that may have a small technical readership unless it provokes interest in the controversial implications it contains. It could have been titled: What Xi Jinping Must Do to Realize His Dream for China.
It is a publication of the Peterson Institute for International Economics a western think tank and thus unsurprising that its core conclusion is that: Absent significant further economic reform returning China to a path of allowing market forces to allocate resources, China’s growth is likely to slow, casting a shadow over its future prospects.
The work never drifts off into ideological matters but single mindedly marches through analysis formed from the relationship of Returns on Assets in state-owned firms and private firms and the positive or negative roles of Enterprise Subsidies, reflecting total factor productivity with returns doing better in the private sector, and why.*
Lardy is careful to layout all the components needed to make those judgments, this occupying a large sector of the work. Appendix A Assets in China and Appendix B Enterprise Subsidies documenting technique. With these findings he projects what may happen if resources properly allocated by the market forces.
There are alternative explanations in the existing literature for both the slow down and China’s future prospect centering on Debt, Demographics, and Middle-Income Traps and Lardy’s treatment of each provoke fresh thoughts not seen elsewhere by this reviewer and one more reason why this publication may develop a following.
A common theme about China’s future seen by other analysts, for example in the works of Carl Minzner** and George Magnus,*** argue that China’s current slowdown is the result of the natural maturing of an economy and that we should now expect permanently lower growth.
Lardy however argues that “[many] prognosticators are looking at the wrong data. In fact, transitory factors—some of which have largely dissipated—account for a large part of the slowdown. The implication of those factors is important: the evidence suggests that further slowing is far from inevitable—and in fact would be unlikely if China resumed the market-oriented reform strategy evident before President Xi came to power,” (loc. 263-279 )
He goes on to forecast growth rates returning to 8 percent and above should this occur.
This very likely will open controversy west and east.
What Nicholas Lardy illustrates is that since Xi Jinping assumed office in 2012 there has been a deceleration of private investment relative to state investment and that Xi’s intent seems to be expanding state enterprise development relative to the private sector.
This is a work the specialist will linger over for some time to come.
If interested don’t miss it.
5 stars
*Richard McGregor cites it in his just released: Xi Jinping: The Backlash. 8/19
**End of an Era: How China's Authoritarian Revival is Undermining Its Rise byCarl Minzner
***Red Flags: Why Xi's China Is in Jeopardy byGeorge Magnus
- File Size: 4408 KB
- Print Length: 200 pages
- Publisher: Peterson Institute for International Economics (January 29, 2019)
- Publication Date: January 29, 2019
- Sold by: Amazon.com Services LLC
- Language: English
- ASIN: B07L9J4BX2
- Text-to-Speech:
Enabled
- Word Wise: Enabled
- Lending: Not Enabled
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Amazon Best Sellers Rank:
#216,512 Paid in Kindle Store (See Top 100 Paid in Kindle Store)
- #4310 in Economics (Books)
- #1005 in Business Economics
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