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China’s Obsolete Economic Strategy?

New York Times editorial board published an editorial this morning trying to give advice that’s so laughable and I immediately wrote a comment to rebut them.

“I think NYT should have more editorials about the direction of U.S. economy and government policies than China’s. What you complain about China doesn’t really hold water.
1. Despite the trigger of stock market breakers, the Shanghai stock composite at the beginning of 2016 is little changed compare with beginning of 2015, and compare with SP500 at U.S., the performance is similar.
2. Paul Krugman has been complaining of under stimulation in U.S.. The package is insufficient for generating higher growth in U.S.. Now the high speed trains in China might not generate sufficient return in dollars. It has generated social functions unimaginable by your editorial writers. It has knitted the country together in a closer entity with reasonable fares for internal tourism. I wish U.S. has similar trains instead of all the potholes in the highways.
3. China has plenty of weapons to tackle the higher debt compare to U.S.. She can use the QE to reduce the debt cost. Unlike U.S., now with interest rate rising and debt cost rising. Of course the transition of heavy industries to green energies will take time, but I am sure in 10 years, U.S. will marvel how clean the air of Beijing will be.
4. The so called currency devaluation is more a mirage of U.S. dollar strength than a Yuan weakness. For Yuan compare with basket of currencies used by IMF it actually strengthened. It also is a temporary condition with oil in the $30 range. Don’t expect it will last.”

Space prevent me from making all the points. Here I like to expound more on the question of investing for the future. By orthodox economic theory, investing something like railroad to Tibet makes no economic sense by return of asset. Yet for military, strategic, or the need of people it’s invaluable. The same is true for all the infrastructures of highways and high speed trains. Capitalists count the dollars and cents. Is it profitable to invest in education and health? Republicans here say no, and that’s a debate NYT should be engaging.

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