In 1978, Deng Xiaoping, who Mao Tse Tung called a “capitalist roader”, initiated an economic reform program labelled “market socialism.”
Within two decades, China had managed to transition from a closed communist state to an open centre of dynamic capitalism with the greatest economic growth rates in human history.
After the onset of the Global Financial Crisis (GFC) in 2008, China immediately injected $US586 billion into its economy in classical Keynesian counter-cyclical stimulus spending. The next year, it began the largest fixed investment stimulus program the world has ever seen.
China
Every year, the International Monetary Fund (IMF) sends a group of economists to Australia to survey the domestic economy, comment on the effects of government policy and make some suggestions as to what might best be done in the coming year. It is known as an “article IV consultation”.
The IMF executive board’s latest report was publicly released in early October. After commending Australia’s economic performance during the past two decades, the report noted some challenges ahead. Chief among them is the prospect of “slow growth” in the coming year.
The one thing neoliberal touts want us to forget is that the effects of the Global Financial Crisis of 2008 have never been overcome – and are still felt today.
There is no such thing as everlasting “natural growth” in the world economy. As John Maynard Keynes long ago pointed out, capitalism “seems capable of remaining in a chronic condition of sub-normal activity for a considerable period without any marked tendency towards recovery or complete collapse”.
Factory making high-speed trains, a symbol of China's rapid growth.
The dramatic slowing of China’s economy has significant consequences for world growth. Official statistics likely overstate China’s official growth rate of 7%.
Tianjin residents protest, August 20.
Capitalism with Chinese characteristics is in some strife. This is largely because the government’s attempt to keep growth at an unsustainable 7% a year is fuelled by equally unsustainable debt.
Corporate and local government debt has grown by 50% since 2009, and total debt, which includes household debt, is now close to 187% of GDP.
Australia managed its way through the Global Financial Crisis (GFC) in better shape than most countries, mostly due to two factors.
The first was $83 billion in Australian government stimulus spending, the third largest in the world as a percentage of GDP, behind the US and South Korea.
The second was resilient demand for iron ore and coal exports to China which came from an initial US$4 trillion in Chinese stimulus spending organised through the country’s banks.
A new report by the Stockholm International Peace Research Institute found Venezuela cut its military budget by 34% last year, leading the region in arms spending cuts. In contrast, United States political allies Paraguay and Mexico led the region in upping military spending, raising military budgets by 13% and 11%, respectively.
In April last year, the government of the Marshall Islands announced it would be taking nine nations — China, France, India, Israel, North Korea, Pakistan, Russia, Britain and the US — to the International Court of Justice (ICJ) in The Hague over their possession of nuclear weapons.
Australia signed a free trade agreement with China on November 17. The Coalition government and the media praise the agreement, but other groups are concerned about the implications.
More than 85% of Australian exports will be tariff free initially, rising to 93% in four years. Some of these goods are subject to tariffs of up to 40%. On full implementation of the China-Australia Free Trade Agreement, 95% of Australian exports to China will be tariff free.
United States President Barack Obama and Chinese President Xi Jinping of China have signed a bilateral climate agreement.
Much of the US and British media, and many US Democrats, have hailed the deal as a key step forward. Many US Republicans have attacked it as going much too far.
Anything the Republicans attack has to be good. Right? No. In fact it is an appalling deal.
Let's look at the numbers.
As talks between Hong Kong protesters and the Chinese government began on October 21, the region’s current chief executive C.Y. Leung spoke out against free elections on the grounds that it would empower the poor.
In his first interview with foreign media since the pro-democracy movement began, Leung said that if the public were allowed to nominate any candidate of their choosing, elections would be dominated by the large sector of Hong Kong residents now living in poverty.
The eyes of the world are watching Hong Kong, where masses of people have taken to the streets in defiance of the tear gas of riot police and the threats of the government.
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