Managed Chaos reads into the resounding events of Chinese politics and economy, ending the schizophrenia that the readers have lived with. It delves deep into both elements: the economic narrative that China has sustained a near 10 percent growth rate for 30 years and the political narrative that China is an increasingly fragile state, trapped in an incomplete transition from a totalitarian to a democratic market economy. For the first time, in his reading of China, the author consolidates this paradox by inferring that the cause behind both the growth and the political discontent is the politics of China.
Chapter 7: An Ancient Struggle in a New Guise
An Ancient Struggle in a New Guise
The central government's failure to control the third surge in investment that began in 2002 gives striking proof of its lack of control over the economy. The reasons are not economic but political. The key to understanding this is to be found in the anomaly of the Chinese economic transformation that was described above. Most of the excess capacity that is responsible for China's wasteful growth and its fragile financial health is not a legacy of the communist era. It was created in the 1980s and 1990s, after the move to a market economy had already begun. And most of it resulted not from private investment but fresh investment by the state.