China’s the most free market economy on the planet right now
Of course such a broad statement - China is a viciously free market economy - needs to be tempered more than a little. This is something that’s true in only the one sense, which is that people can actually go do things. As opposed to, say, Britain:
Doing business in London is harder than in China, an influential British property developer has warned.
John Hitchcox, the developer behind the £1.3bn transformation of Kensington Olympia, said a tangle of planning delays and licensing rules in London were causing some developers to “give up”.
Mr Hitchcox, the founder of Yoo Capital, said conditions for development had become “dire” and suggested that projects of Olympia’s scale were becoming increasingly difficult to deliver in Britain.
“I absolutely love what I do and the city that I live in,” he said. “But boy, I’m working in places in China and in India and other parts of the world where it’s a hell of a lot easier.”
Of course it’s possible to say that one prefers the British system, where all development is endlessly picked over before it is allowed to happen. That’s how we get £100 billion railways, £700 million fish discos and the planning inquiry for a river crossing costing more than the Faroes spent on actually building a set of tunnels. Perhaps this is the society desired.
It’s also true that China is not a free market economy in the more general sense - there’s far too much direction by the State for that. Plus financial repression to finance the grand plans and so on. But in the one sense it is very much more free market than Britain. While China has substantial direction of people to do things it has very little in the way of direction to not do things. It’s possible to wander in with an idea, get it up and running and see if it works in a way that Britain does not allow.
An experience from one of us here, the building of a factory to extract a specific element from a particular waste stream from another process. A Chinese firm went from concept to producing in the time it takes to do the environmental paperwork here in Europe. Note that that’s an observation, not a recommendation.
As we’ve pointed out many a time before economic growth is people doing new things, doing old things in new ways. The speed of economic growth is therefore, by definition, the speed at which people can do new things, old things in new ways. Slow that down and economic growth will be slower. China grows faster than Europe because there is less of that slowing down.
Of course, to its economic detriment, China has far too many governmental plans for this and that, too much direction by the State. But at the actual economic coal face of new business creation it’s an alarmingly, viciously, free market place. Which is why the growth rate is higher - it’s all despite Communist Party management, not because. The CCCP does direct effort to failures but there’s very little prevention of the experiments of what might work - which is why the system works in this economic sense.
Perhaps we might copy just that part of the system? You know, actually allow people to do things?
Tim Worstall