While the worrywart commentators are focused on the slowing of China's growth (even though most forecasts still start with a '7', which doubles income in a single decade), they reinforce the drama by implying that China has run out of policy options to maintain growth.
Sure, China may not be able to repeat the huge stimulus of 2009, but what about redirecting income from the high-profit/high-saving state-owned enterprises (SOEs) by decreeing a substantial increase in wages? The workers will save some but spend some. The result will be less over-investment by the SOEs and more consumption. Won't that help the imbalances? Isn't that what a worker-oriented socialist economy should be doing?
Photo by Flickr user memn.
