My personal sense is that the skeptics about the viability of China’s economic performance are mistaken, that essentially people don’t like the idea that the lesson of the Chinese economy in the 2008-2010 period is that better policy could have helped other countries weather the storm much better than we have. But as I’m trying to expose myself to the contrary view and not just get sucked into groupthink, so I linked to this bearish article last week. Today, though, I’d like to link to Scott Sumner’s rebuttal which strikes me as convincing.
Clearly the Chinese economy doesn’t walk on water and it’s not going to deliver 10 percent growth per year every year forever. It especially won’t do that if Europe slides off the cliff and drags the US into a double dip. But the outlook continues to be good. For most of the 20th century, China suffered from terrible policy. Recently, the policy has become much better and it’s paying off big-time.