China’s Construction Fetish
Most of China’s just-announced $586 billion stimulus will go to transport systems, with more than half devoted to railroad projects alone. But, while concentration of resources in the government’s hands through state ownership and taxes served China well for the past 30 years, what the country needs now are reforms that boost private consumption.
NEW HAVEN – As we digest the implications of China’s $586 billion stimulus plan, it is intriguing to ponder why China chooses infrastructure, buildings, and big projects every time growth needs a boost. Should, or can, China achieve long-term growth only by adding physical structures? If and when the time comes to pause or change course, will China’s existing political-economic institutions accommodate such a transformation?
NEW HAVEN – As we digest the implications of China’s $586 billion stimulus plan, it is intriguing to ponder why China chooses infrastructure, buildings, and big projects every time growth needs a boost. Should, or can, China achieve long-term growth only by adding physical structures? If and when the time comes to pause or change course, will China’s existing political-economic institutions accommodate such a transformation?