economics

May 27, 2010

Chinese Economy Treads Risky Path. (Ask Japan.)

Filed under: Uncategorized — ktetaichinh @ 4:22 pm
Tags: ,

China is different in two respects that may seem contradictory. On one hand, major industries like oil, telecommunications, banking and aviation are deemed strategic and are under tight state control. Of the 22 Chinese corporations listed on the Fortune Global 500, 21 are controlled by China’s central government or state-run banks. Just one, Shanghai Automobile, is run by a local government. None are privately owned.

These “national champions,” as the government deems them, are the vanguard of China’s push into global markets, and the evangelists of Chinese economic values.

On the other hand, light industry, retailing and the nation’s booming export sector are more free to play by Adam Smith’s rules. In contrast to Japan, in China Western retailers and consumer goods, from Wal-Mart to Snickers to Tesco, are ubiquitous and compete vigorously with homegrown competitors. And many of China’s leading exports, like iPods and Nike sneakers, are manufactured by or for foreign multinationals that retain most of the profits from their sale.

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