Reuters
Milton Ezrati, National Interest: The Fatal Flaw in China's Plan for Dominating the World Economy
Dependence is baked into China's industrial plans—and will likely fail.
Chinese premier Li Keqiang recently delivered a remarkably revealing speech. Addressing the National People’s Congress for two full hours early in March, he stressed the county’s determination to rely on broad industrial policies as a means to development. The objective, to use Li’s words, is to “speed up work to build China into a leader in manufacturing.” Li doubtless wanted his audience and the world to hear his remarks as a challenge to Western economic power. Many no doubt did. What Li failed to note, and assuredly does not realize, is how his blueprint for progress, rather than ensure Chinese dominance, will instead keep that country indefinitely dependent on the West, doom it to repeat its already well-established pattern of wasteful overbuilding, and ensure that its economy will always remain just a bit behind the West technologically.
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WNU Editor: I concur with Milton Ezrati's analysis. The Chinese government is depending on an environment where China will continue to export products abroad, enjoy huge trade surpluses, and reinvest these earning to build-up China. But this export-driven policy does have one fundamental flaw .... countries with huge trade deficits will falter and will no longer be capable (or able) to buy the products that China needs to sell in order to continue growing. What happens then .... and specifically .... what happens when countries like the U.S. start to consider imposing tariffs to protect their own industrial base. Telling the U.S. to "take a hike" is not going to cut it .... Don’t push us, China says to Trump’s demand for US$100 billion cut in the Sino-US trade gap (SCMP).
