Coronavirus pandemic 2019-20 #5

Let us consider the latest round of claims being put by mainstream economists (and parroted by some inside China, ie those who were nicely educated in neoclassical, free market economics in American universities).  For example, here is the latest view of the Financial Times. “Government policy is largely to blame for the slowdown. Decades of relying on an investment-driven growth model has slowed China’s transition to a consumer-based economy. Poor oversight of the housing market led to an unsustainable lending boom, while political impediments have hamstrung private enterprises. Heavy-handed Covid restrictions have also left deep scars.”

So first, let’s blame the Chinese government for the slowing economy – presumably for interfering in business and the capitalist sector.  But then claim that “decades of relying an investment-driven growth model” is at fault because what is needed is a “transition to a consumer-based economy”.  Really? Have the consumer-based economies of the G7 done better than the awful investment-led Chinese economy in the last two or three decades? Take a look at this graph below.



But the FT and other experts might retort, since COVID things have changed in China; now the economy cannot recover.  Really?  Look at this graph on the growth rate of China and the US since the COVID pandemic started.  Indeed, during the COVID pandemic slump year of 2020, every major advanced capitalist economy suffered a recession, but, as in the Great Recession of 2008-9, China did not.  And yet China applied the most stringent and draconian series of lockdowns during the pandemic.



And while the US economists are in rapture over 0.6% growth in the US economy in Q2 this year, apparently 0.8% growth for the same quarter in China is to be considered a disaster.

The FT says that “heavy-handed Covid restrictions have also left deep scars.”  Well, those ‘heavy-handed’ measures also saved millions of lives in China, when its health system was at breaking point and inadequate to the task.  During 2020-21, when the COVID death rate rocketed in the West, China’s stayed at miniscule levels.  Eventually, as lockdown exhaustion emerged and protests rose, the government relented and ‘opened up’ the economy, the death rate rose – but only to 85 per million compared to 3300 per million in the US, or to ‘open’ Sweden at 2325 and or even India at 375 (ludicrously underestimated).  The ‘deep scars’ were and are still being felt in Europe, the US and Latin America from COVID deaths and long ‘COVID’ on the health of the workforce and economic growth.  This year, the IMF forecasts China will grow 5.3%, while the advanced capitalist economies will manage only 1.5%, with the Euro area reaching only 0.9% and Germany and Sweden in outright recession.