THE CONTRADICTIONS FORCE THEMSELVES:

China loses its policy mojo (John Garnaut, September 3, 2007, Sydney Morning Herald)

Much of the frustration is directed at Wen Jiabao, the Premier who has either set unrealistic expectations or failed to make the tough policy decisions necessary to achieve them.

"You guys work out a consensus between yourselves" was Wen's direction to rival officials who recently came to a stalemate on a pressing economic problem.

On Friday Citigroup's chief Asia economist, Huang Yiping, issued a scathing report that highlighted the gap between rhetoric and reality on trade imbalances, growth imbalances, the stockmarket, energy consumption and pollution.

"Since the beginning of economic reform, China has been known for its decisiveness in economic policy making," he wrote.

"Unfortunately, recent experiences appear to suggest that such decisiveness might be gone, at least in areas of macro-economic policy."

Huang suggested economic policy had not only stalled, but had gone backwards.

"Application of administrative measures … implies the reversal of the reform process. The protection of certain industries or enterprises often overrules the long-term interest of the economy.

"The above implies that China's macro-economic problems will continue to develop until either the authorities take more decisive policy actions or something blows up."

Wait, weren't they supposed to have found the alternative to the Anglo-American model that would allow them to ignore all those realities?

Posted by Orrin Judd at September 3, 2007 7:29 AM