China Bails Out Its People

Faced with declining exports due lower demand from many western countries entering recession, China’s central command has announced an economic stimulus plan of 586 billion dollars. Unlike the United States and many European countries, China will not be bailing out its banks, but rather investing in much needed infrastructure and social programs. Having 2 trillion dollars in reserves and owning much of the western world’s debt, this is definitely something China can afford to do.

This spending, which includes much needed rural infrastructure, disaster relief, and environmental cleanup funds, is long overdue. Nowhere, with the possible exception of India, are the disparities between urban and rural areas higher. In addition, the government was horrible in its response to the Sichuan earthquake this past May, which killed 700,000 people. However delayed and sterile the response, it made the U.S. response to Hurricane Katrina look superb.

For too long, China has had no accountability and has been corrupted by incompetent local fiefdoms. This has led to virtual ignorance on the part of the central command toward regional and local governments until something goes wrong. Then, when something goes wrong, it usually goes horribly wrong, as is the case with the recent tainted milk scandal. What happens when something goes wrong? Horrible overreaction on the part of the central government of course. Does any of the above sound familiar? Perhaps it reminds you of the laissez-faire governance, ensuing disaster, and resulting overreaction seen in the recent financial crisis in the United States?

Virtual laissez-faire governance and capitalism in communist China? Dear God, where have all the global stereotypes gone? Next thing we know, people will be accusing George W. Bush of being a communist. Oh wait, never mind. Well, at least China is investing in its people rather than bailing out its banks.