Greece is the word. Or is it? If it weren’t for the house of cards that is the Eurozone, the world wouldn’t be talking about the Greek economy – not when Chinese economic growth is creating the equivalent of a new Greece every three months.
But what if all is not well in China? What if the political mismanagement that has laid waste to Greek prosperity is also to be found in the People’s Republic, but on a massively greater scale?
Writing for Project Syndicate, Minxin Pei argues that the idea of the meritocratic – if undemocratic – Chinese system of government is a myth used to justify the undemocratic part of the equation. In fact, the spectacular fall of Bo Xilai (until recently a rising star in the new generation of Chinese leaders) is an indictment of the whole system, not just one individual:
Pei documents various abuses, but from a global economic perspective, the most worrying aspect is the manipulation of growth rates:
Again, the author emphasises that this is part of a much wider pattern:
So, what the Chinese experience tells us is this: Running up unsustainable levels of debt really is a surefire way of boosting economic growth – as long as you don’t care about the long-term consequences.
Lucky for Britain that we don’t have any politicians like that!