China’s GDP Growth Falls: Is It Finally The End? | Daily Ticker - Yahoo! Finance

China’s GDP Growth Falls: Is It Finally The End? | Daily Ticker - Yahoo! Finance:

China's GDP growth slowed to a two-and-a-half year low in Q4, stoking fears that China's economy is about to hit the skids.

(To keep things in perspective, GDP growth was still a remarkable 8.9%, but that's slower than it has been over the last couple of years.)

So is China's "slowdown" the first sign of a crash that China bears have been warning about for, well, for the past 30 years?

Not clear, says Gillian Tett, the U.S. Managing Editor of the Financial Times.

One thing that is clear, says Tett, is that China needs rapid growth to keep its people tolerant of the country's single-party government rule. If growth ever really stumbles (or, catastrophically, the country goes into a recession), social unrest would likely increase.

Given the booms and busts the rest of the world has gone through over the past three decades, China's steady growth has been remarkable. Some of this is likely due to China's growth statistics saying whatever the government wants them to say. And some of it is also due to the fact that China is growing off of a small base. (It was only in the early 1980s that the country really began to embrace capitalism).

But even considering the questionable statistics, the steadiness of China's growth has been startling.

So is this a sign that the free-market capitalism embraced by the west is not, in fact, the best economic system on the planet? Is it a sign that a significant amount of centralized control can help to stabilize economic growth?

Well, one thing that China certainly has going for it, says Tett, is the ability to implement and carry out ambitious long-term plans. This is in stark contrast to the west, where we lurch from one crisis and election cycle to the next, never looking forward far enough to develop major investment initiatives.

In other words, it may well be that "capitalism with Chinese characteristics" does have some advantages over its western counterpart, especially when the governments of western democracies are as divisive and dysfunctional as they are now.

'via Blog this'