The Organization for Economic Cooperation and Development urged China to make good on pledges to force state companies to compete in more open markets and ease movement of migrants into cities to keep its economic growth strong. Forecast growth is at 8.5 percent this year, while risks from inflation and government debt are low. However, because of Chinese government's intervention in subsidizing state companies, it creates an unfair market for foreign companies, especially in energy and finance. There were some reforms, but they have yet to decide whether or not they will address the monopoly problem and the issue of making it hard for workers to move into the city for higher-paid jobs. Failing to solve this problem can have serious political and economic consequences on China.
Source: http://news.yahoo.com/oecd-urges-china-free-markets-ease-migration-074335429--finance.html
2 comments:
I agree with the Organization for Economic Cooperation and Development. For too long China has been helping their companies to better compete against foreign firms. This is unfair to the foreign companies and the world should not tolerate this behavior.
I agree that China's economic policy puts many nations at a disadvantage, but the complicated geopolitics behind this situation make any sort of solution difficult. Of course, it makes sense for China to protect its own industries as a form of self-interest despite resulting greater economic inefficiency. America does the same with certain anti-dumping regulations and subsidizes to unproductive firms. However, increasing global pressure from organizations like the OECD will have an effect on Chinese policy. My haphazard prediction would be that China will experience a milder form of Russia's economic liberalization. With succeeding Chinese leaders, their tendency to resist free market policies will weaken. While the political stability of the country is even harder to predict, I find it inevitable for China to move closer to a liberalized market economy.
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