In Praise of China's Economic Policies

Joseph Stiglitz, Nobel Prize-winning economist, has some good words to say about China's economic development.

"Never before has the world seen such sustained growth; never before has there been so much poverty reduction." Strong words, indeed! Stiglitz attributes the country's success to a combination of pragmatism and vision as it "seeks sustainable and more equitable increases in living standards."

Mirabile dictu, it appears as though China acknowledges it has problems and tries to fix them. For example, China does acknowledge the problem of global warming and has adopted taxes on things (such as cars) that are felt to accelerate the problem.

While China is embracing a market economy, it realizes that there are some things that cannot be left to the dictates of the market; the government must act for the good of the country. Stiglitz feels that because China is willing to have a reasonably open discussion of its economic policies it can come up with creative ways to address its challenges.

He is worried, as he should be, that, as internal consumption and social spending increase, China's fantastic savings rate will diminish. This savings rate is one of the major factors financing our deficit. If there are less savings, will we be able to sustain our record debt level?