China's policy lessons for the west
2016-03-11 04:13阅读：
Financial Times, 11 March 2016.
Are state-owned enterprises so much worse than QE or negative
interest rates? writes Joe Zhang,
Economic policymaking in the west has developed in
radical ways since the global financial crisis. When Lehman
Brothers collapsed in 2008, the US after some hesitation allowed
the Federal Reserve to intervene in the markets. Afterwards, the
European Central Bank
did the same in response to the sovereign debt crisis in
Greece and other EU states.
Since then, quantitative easing has had a real impact on western
markets. So-called
helicopter drops
are now in vogue, and negative interest rates have gained
acceptance in spite of widespread anxiety about their unknown
effects. The fashion for unconventional monetary policy was
highlighted yesterday with the
ECB’s decision to cut
interest rates in the eurozone to a record low and to expand its
quantitative easing package.
But there are other ways of stimulating demand. Why, for
instance, do western governments refuse to set up state-owned
enterprises that will create jobs? Are they really so much worse
than QE and low or negative interest rates?
A number of concerns surround the state sector. First, it is less
efficient than private businesses. But when private investment
falls well below a desired level, the state should step in to fill
the gap. In any case, it is debatable whether state-run enterprises
are less efficient than welfare spending, direct subsidies, QE or
negative interest rates.
Second, will investment by the state sector necessarily displace
(or “crowd out”, as economists like to say) the private sector?
Evidence is mixed. In some cases, this may happen if the state
competes with private companies for financing, pushing up borrowing
costs. But the west today does not have to worry about that, since
it is sliding into a zero-interest rate environment.
Moreover, evidence from around the world suggests that the state
sector supports the operation of the private sector. It can even
help to incubate new private industries by providing “patient
capital” and basic infrastructure, as well as physical
facilities.
There is not much that
China can teach the
rest of the world about
economic policy. Nevertheless, its
experience in the past century or so can be a useful
reference point for policymakers. (for the rest of the essay, click
the link below)
http://www.ft.com/intl/cms/s/0/f3a02f84-e6d0-11e5-a09b-1f8b0d268c39.html#axzz42WzZissx
