Eswar Prasad exist today’s new york times:
The real challenge is for the government to clearly understand that without a strong relationship with the private sector, hopes of transforming the economy into a high-tech economy that can generate more productivity and employment growth are unrealistic. It needs to support this recognition with concrete measures to support the private sector, including liberalization of the financial sector, which would help channel more resources to private firms rather than state-owned firms. Transparency of information and its decision-making process will help the government even more.
As long as the current regime prioritizes central command and control over growth and job creation, it is not clear that growth will recover.All indications are that the financial accelerator is working in reverse, although this has not led to a catastrophic crash (see Nick Lardy’s Viewpoint), will ensure future economic hardships (in fact more difficult than official statistics suggest, as discussed in this article) postal).
figure 1: China GDP YoY growth (blue), and growth implied by China CAT (red), IMF WEO July forecast (sky blue squares). ECRI defines the peak-to-trough dates of recessions in gray. Source: National Bureau of Statistics, personal communications, IMF World Economic Outlook July UpdateECRI and authors’ calculations.
Personally, I am skeptical that there will be a trade-off in favor of more growth and economic liberalization, given my observations of the behavior of current leaders. However, the pragmatic history of earlier regimes gives us a glimmer of hope.
