China: Development with Financial Stability
Lucas J. Dib*
*Visiting Scholar at Fudan Development Institute, Fudan University. PhD Candidate and Associate Research at FGV, Brazil, 7th top Think Tank worldwide. Expert in Banking and Financial System, and a “high foreign talent”.
Article prepared to China Daily. Jul, 2018.
Abstract
Amid all those who aspire to understand the Chinese economy and its financial institutions, we can underline two critical interpretative “groups”: one, radical, has predicted an always imminent economic crash (that has never come); the other, moderate, foresees a forthcoming stagnation process. Interestingly, both have failed in their forecasts. Now the issue is what do they have in common?
Both of these groups have blamed the increases in the credit supply and its mismatch with the nominal GDP growth post-2008 crisis (the US Great Financial Crisis, GFC). They have been critical of the role of State-Owned Enterprises (SOEs) as strategic drivers to foster and underpin development and declare that SOEs have shown less productivity and resource misallocation. Last but not the least, they have criticized the Chinese political system approach albeit this very same system which has lifted millions out of poverty while the so-called liberal-democracies are under a crisis legitimacy worldwide and haven't delivered improvements in living standards at the same pace and speed as China.