Bungling Beijing’s Stock Markets - The New York Times
▻http://www.nytimes.com/2015/08/14/opinion/paul-krugman-bungling-beijings-stock-marketshtml.html?smid=fb-nytimes&smtyp
China is ruled by a party that calls itself Communist, but its economic reality is one of rapacious crony capitalism. And everyone has been assuming that the nation’s leaders are in on the joke, that they know better than to take their occasional socialist rhetoric seriously.
Yet their zigzagging policies over the past few months have been worrying. Is it possible that after all these years Beijing still doesn’t get how this “markets” thing works?
The background: China’s economy is wildly unbalanced, with a very low share of gross domestic product devoted to consumption and a very high share devoted to investment. This was sustainable while the country was able to maintain extremely rapid growth; but growth is, inevitably, slowing as China runs out of surplus labor. As a result, returns on investment are dropping fast.