As you write, there indeed seems to have been no planning whatsoever for coping with the follow-on effects of the new 'lay flat' (躺平) policy. But:
(1) Does this non-existent and/or ineffectual planning really depart from the norm?
And (2) Is masterful planning something which China even advertises? And if so, what exactly?
Sure, we understand that devoted fans of central planning need heroes, but is central planning what made China great? Was this allegedly admirable planning 'successful' over the past year? How about over the past ten years, during which the government deficits have grown to enormous levels, and all this freshly printed cash has left China with a home price to income ratio which is over eight times the level in the United States? Even if we judge them by their own standards, this doesn't sound very impressive.
If famed economist Steven Cheung (张五常) is correct, the opposite was the case: reform-era China succeeded precisely because it promoted competition among regions, allowing the towns and regions offering the most attractive conditions to reap the financial benefits of investment and economic expansion. To put it another way, China succeeded by NOT planning things centrally. This is of course also the Austrian School of Economics perspective. Judging them by their latest slogans, it would appear that the leadership has now been reminded of the charms of this wisdom. Let's hope it lasts.
thanks for your comments. As I pointed out in the article, China is the last major economy to reopen. It has nearly three years of preparing for this and learning from other countries. I am very surprised that it does not have an exit plan. It has nothing to do with the systems. It is common sense.
Secondly, China's central planning has evovled as it opens up and integrates into the global economy. Its current five year plan is very different from the old days of the planned economy, more along the line offering general indicators. But the five-year plans and the long-term plans of 15 years or longer have enabled the Chinese government to focus their finanical and human resources on their priority goals. The central government has a five-year plan and so do the local authorities. The past three pandemic years are an anomaly. If you look back over the past four decades, China has a proven record of hitting its targets and has become the world's second largest economy. If the five year plans do not mean much, the US would have not become so worried about China's Manufacturing 2025.
There is a problem with the perspective of the Austrian School of Economics, though. If it is a good explanation for what China achieved during the four decades of its reform era, then why is it that Laissez-faire competition did not produce the same results in most other developing countries? The reform era certainly saw China's central government loosening central planning in favour of Laissez-faire competition among regions and businesses in China, but there is no shortage of other developing countries going farther down the road of laissez-faire than China did. Yet, those countries usually did not fare nearly as well as China did in investment and economic expansion. So there must be other explanations.
What are the keys to productive human interaction? You are of course correct that multiple factors no doubt played a role, though quite a few of these have been uncovered by economists from the Austrian school over the course of the past 150 years. One of these is the fact that central planning tends to be destructive, and that the attempt to plan all economic activity is in fact unsustainable. Another is that average time preference plays a role. Ceteris paribus low time preference translates into higher rates of savings and a larger base of productive capital. This factor - comparatively low time preference - is doubtless also at play in China, though historically comparable time preference levels can also be found in other places such as Japan or the Germanic countries. Be that as it may, there are always multiple factors at play and I don't think anyone has ever claimed that economists from Austrian School have covered all of them.
As to the promotion of "laissez faire" which you mention, that is not a commonly used concept in Austrian circles. However, if you are thinking of a specific country which you are comparing to China, feel free to share. Maybe we can figure out some of the key differences which contributed to the differing results.
As you write, there indeed seems to have been no planning whatsoever for coping with the follow-on effects of the new 'lay flat' (躺平) policy. But:
(1) Does this non-existent and/or ineffectual planning really depart from the norm?
And (2) Is masterful planning something which China even advertises? And if so, what exactly?
Sure, we understand that devoted fans of central planning need heroes, but is central planning what made China great? Was this allegedly admirable planning 'successful' over the past year? How about over the past ten years, during which the government deficits have grown to enormous levels, and all this freshly printed cash has left China with a home price to income ratio which is over eight times the level in the United States? Even if we judge them by their own standards, this doesn't sound very impressive.
If famed economist Steven Cheung (张五常) is correct, the opposite was the case: reform-era China succeeded precisely because it promoted competition among regions, allowing the towns and regions offering the most attractive conditions to reap the financial benefits of investment and economic expansion. To put it another way, China succeeded by NOT planning things centrally. This is of course also the Austrian School of Economics perspective. Judging them by their latest slogans, it would appear that the leadership has now been reminded of the charms of this wisdom. Let's hope it lasts.
thanks for your comments. As I pointed out in the article, China is the last major economy to reopen. It has nearly three years of preparing for this and learning from other countries. I am very surprised that it does not have an exit plan. It has nothing to do with the systems. It is common sense.
Secondly, China's central planning has evovled as it opens up and integrates into the global economy. Its current five year plan is very different from the old days of the planned economy, more along the line offering general indicators. But the five-year plans and the long-term plans of 15 years or longer have enabled the Chinese government to focus their finanical and human resources on their priority goals. The central government has a five-year plan and so do the local authorities. The past three pandemic years are an anomaly. If you look back over the past four decades, China has a proven record of hitting its targets and has become the world's second largest economy. If the five year plans do not mean much, the US would have not become so worried about China's Manufacturing 2025.
There is a problem with the perspective of the Austrian School of Economics, though. If it is a good explanation for what China achieved during the four decades of its reform era, then why is it that Laissez-faire competition did not produce the same results in most other developing countries? The reform era certainly saw China's central government loosening central planning in favour of Laissez-faire competition among regions and businesses in China, but there is no shortage of other developing countries going farther down the road of laissez-faire than China did. Yet, those countries usually did not fare nearly as well as China did in investment and economic expansion. So there must be other explanations.
What are the keys to productive human interaction? You are of course correct that multiple factors no doubt played a role, though quite a few of these have been uncovered by economists from the Austrian school over the course of the past 150 years. One of these is the fact that central planning tends to be destructive, and that the attempt to plan all economic activity is in fact unsustainable. Another is that average time preference plays a role. Ceteris paribus low time preference translates into higher rates of savings and a larger base of productive capital. This factor - comparatively low time preference - is doubtless also at play in China, though historically comparable time preference levels can also be found in other places such as Japan or the Germanic countries. Be that as it may, there are always multiple factors at play and I don't think anyone has ever claimed that economists from Austrian School have covered all of them.
As to the promotion of "laissez faire" which you mention, that is not a commonly used concept in Austrian circles. However, if you are thinking of a specific country which you are comparing to China, feel free to share. Maybe we can figure out some of the key differences which contributed to the differing results.