The Blurb On The Back:
The recent downturn in the Chinese economy has become a focal point of global attention, with some analysts warning that China is edging dangerously close to economic meltdown. Is it possible that the second largest economy in the world could collapse and drag the rest of the world with it?
In this penetrating essay, Ann Lee explains both why China’s economy will not sink us all and the policy options on which it is drawing to mitigate against such a catastrophic scenario. Dissecting with realistic clarity the challenges facing the Chinese economy, she makes a compelling case for its continued robustness in multiple sectors in the years ahead.
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The Review (Cut For Spoilers):
Ann Lee is a former visiting professor at Peking University and a recognised authority on China’s political economy and in this rose-tinted and slightly complacent essay, she argues that China is essentially a special economic case that will not collapse as western economists fear because structurally it has mechanisms in place to prevent it.
I picked this book up because I had read articles and watched documentaries on the subject over the last few years and because I’m not a political economist by background and have no expertise in China I was interested in Lee’s argument.
This essay, divided into 4 chapters examines a number of ways in which China’s economy could be at risk of collapse and then explores both how China’s authorities could mitigate the effects of the same and what the likely effects of such events would be. As a novice, I was interesting to read about the different parts of China’s financial system – the SOEs (state owned enterprises that operate a lot of industrial manufacturing activity, ‘shadow-banks’ (entities that engage in unregulated financial activity) and municipal finance (whether through state loans or the issue of private bonds) and how this ties in with China’s five-year economic plans with Lee being particularly good on setting out the ways in which these different areas could come under pressure.
Where Lee lost me however was in setting out the potential effects of crisis events – partly because she maintains a position that China’s economy is a special case that isn’t subject to the same risks and narrow self-interest as Western economies because of the way the state retains strict control over the operation of capitalism and partly because she takes each event independently without much consideration of a domino scenario where one event triggers impacts in various sectors. She also places reliance on the information and statistics that China puts out about its economy, which seems to ignore the China’s got an interest in not revealing the whole picture (indeed, inability to verify information was a key concern when China suspended its stock market). In essence her argument boils down to “it can’t happen here and if it did happen it wouldn’t be so bad” and I can’t help but think that’s a little complacent given these current uncertain and volatile times.
WILL CHINA’S ECONOMY FAIL? was released in the United Kingdom on 16th June 2017. Thanks to the Amazon Vine Programme for the review copy of this book