One Thing That The US Can Learn From China
I generally recoil at the notion that the United States has anything to learn – let alone emulate – from China. How maddening it is when someone as prominent as Thomas Friedman, who publicizes his opinions without fear of censorship or imprisonment, sings the praises of the Chinese system of government. (Where’s censorship when you need it?) Similarly, Nicholas Kristof, who styles himself a human rights activist, often praises the Chinese education system – a system based on rote memorization, corporal punishment, and excessively long hours. (Kristof, for the record, attended Harvard.)
There is one area in which China has genuinely outpaced the United States over the past few years, however: economic growth. Even as most of the world has endured a punishing recession, China has continued to grow at a clip of 9 or 10%. Meanwhile, the US is mired in slow growth, and, alas, continues to shed jobs.
Dare I say it? Fine: we have to learn from China. Their success at beating the recession is one that the Obama administration should seek to emulate.
The Beijing government took two steps that successfully averted a recession. In so doing, the government preserved the upward Chinese march that has lifted hundreds of millions out of extreme poverty – and into mere poverty. First, Beijing unleashed a colossal stimulus dedicated to infrastructure improvements and construction. This kept millions of Chinese people employed in the building trades that would have otherwise suffered. (Shanghai’s spectacular skyline has become even more spectacular in the past year. Now if only we could see the beautiful new towers through the damn smog.)
Second, and more instructively, the Beijing government cut interest rates and lent massively to banks. The New York Times recently reported that, “Chinese banks are stepping up consumer lending. The proportion of car sales financed with loans has doubled this year, to nearly 25 percent, although most Chinese still head for dealerships with bricks of 100-renminbi notes, each note worth about $14.62. Credit card spending rose 40 percent in the first nine months of the year compared with the same period last year.”
The Beijing government wisely decided to trust its banks – and, more importantly, its citizens – by putting money in their pockets. It was wise enough to embrace and encourage risk, and therefore successfully avert a painful recession.
Sadly, the Obama administration is taking the exact opposite course. What the the country needs now is to encourage risk and empower its citizens through low-interest loans – just as China has done. Lamentably, however, the Obama administration is enacting a paternalistic, anti-risk regulatory regime that will make it harder for Americans to get their hands on cash. Implicit in this approach is the belief that Americans aren’t capable of handling money. This is a wrong-headed move, and one that only increase economic pain.
The US should not seek to imitate China’s human rights policies, its freedom of speech policies, its foreign policies, its lax copyright laws, or its restrictions on citizen movement. But when it comes to money? Maybe those Communists have something to teach us.