Inertia Wins!

Elizabeth C. Economy – The Third Revolution: Xi Jinping and the New Chinese State

A very useful guide to China’s economy and political culture. It is especially credible because it lacks the exaggerated, hyper-emotional tone that many China analysts have taken in the Trump era. Economy’s general take is that China’s reach exceeds its grasp. After five years in office, President Xi Jinping has established that he is no liberalizer. He is re-centralizing economic and political power and undoing some, though not all, of the limited 1990s and 2000s-era reforms.

This is bad for China’s future. But it is no reason for other countries to be scared. Centrally run economies tend not to perform well, to put it mildly. Economy gives example after example of grand central plans for Chinese education, manufacturing, technology, and urban planning that sounded scary, but turned to be pretty crappy in practice. Such plans also consume billions of dollars of resources that could have been better used elsewhere, doubly foiling China’s geopolitical ambitions.

in short, as long as China remains illiberal, it will have limited growth prospects. It will fall further behind its more liberal neighbors and potential adversaries.

This is a shame because China’s 1.3 billion people have both human rights and enormous potential. Their government’s policies have left the country without a vibrant economic or political culture—there is a reason China has few homegrown international brands besides Alibaba and Lenovo. The Great Firewall around China’s internet and its political repression might make the current regime feel more secure, but they prevent the Chinese people from engaging with and profiting from the rest of the world.

The rest of the world needs to continue to put pressure on China’s government to reform its human rights abuses and act in economic good faith. The Trans-Pacific Partnership that Trump pulled out of is a natural venue. Eleven other countries are still party to it, and U.S. participation could only make it stronger. The WTO’s dispute resolution process, which Trump wants to pull out of is another option.

Some of Economy’s other policy recommendations, such as expanded use of the Export-Import Bank, are prone to the same problems as their Chinese analogues, and should be avoided. But overall, this is a smart and sober take in a political climate that badly needs it.

Martin Wolf – Why Globalization Works

Of all the books in the early- and mid-2000s boomlet of popular-level books on trade and globalization, this is probably the one written at the highest level. Wolf is a longtime writer for the Financial Times, and before that was an academic and a think tanker. He offers some deep insights into the economics of trade, devastating critiques of anti-globalization activists, and a qualified defense of the current international trading system, which, as of this writing, is still governed by the WTO’s dispute resolution process and a number of bi- and multi-lateral trade agreements around the world. This system is imperfect and overly complicated, but it is a world better than what trade’s enemies had in mind back then and still do today.