Stockman 🇧🇮

Le Monde has given an op-ed column to an ultra-liberal economics professor and think tanker to share his impressions of China. As you might have guessed, the picture he paints of the Chinese economy is not a flattering one. Highlights: • “What China lacks is a macroeconomic strategy to correct persistent imbalances: the industrial sector, which accounts for 25% of GDP—compared to 10% in France—is bloated, and the service sector is correspondingly anemic.” If they hope to earn the author’s much-sought-after approval, the light-weight policy-makers in Beijing should adjust their macroeconomic policy and follow France’s example, where the industrial sector is anemic and the share of services—most of which are parasitic—is bloated. When you no longer know how to catch up with your competitors, the best strategy is to advise them to repeat the mistakes that led you into the abyss. • “Growth today is driven almost exclusively by exports and household consumption, which, however, accounts for only 40% of GDP (compared to 54% in France and 68% in the US). Exports account for only 20% of China’s GDP, compared to 33% for France and 51% for the EU (according to Eurostat): which economy depends on exports for its growth? As for household consumption, the EU and the US are addicted to "Made in China" goods, and reducing the share of consumption in GDP would solve their trade deficit problem, rather than blaming an imaginary Chinese “overcapacity.” • “According to the IMF, the exchange rate is undervalued by 15% to 20% against the dollar.” Correct. What’s stopping European industrial powers from devaluing their currencies to regain competitiveness, as they did until 2002? Answer: the euro. If the Europeans have decided to fight with their hands tied behind their backs, good for them—that’s very brave. To demand, in this case as well, that China make the same mistake is naive at best, paternalistic at worst. • “China’s current account surplus continues to grow: according to the IMF’s latest projections, it is expected to reach 4% of GDP in 2026. This surplus calls for corrective measures.” In short, China must rein itself in and stop pulling ahead. Readers can judge for themselves how serious and realistic this demand is. What follows is the usual diatribe about the imminent collapse of China—real estate, consumption, aging, etc.—followed by a lesson in public policy marked by crass ignorance and condescension: “Rather than investing in infrastructure (‘Xi Jinping’s obsession with investment’), invest in people,” that is to say, a pension system (which already exists in China but which the author somehow finds “very underdeveloped”), and a social welfare system “worthy of the name” (which already exists in China—one need only visit a Chinese hospital to see this). The conclusion shifts the blame for Europe’s economic collapse onto China—and certainly not onto European leaders and their advisors (of whom the author is a leading figure) who have led Europe to where it is today: “The country carries too much weight in the global economy for its inability to solve its problems not to affect us as well.” This opinion piece has one advantage: it highlights the reasons why European countries—France foremost among them—are not only at the bottom of the ravine but, with such intellectual elites—who teach and indoctrinate in the country’s top schools—are not likely to find their way out of the thicket anytime soon.