May 22, 2019 | 02:04 PM


04.07.2013China: A Paradox of Duality

Keep an eye on China.

Raphael Bostic, Forbes.com

I currently serve on the board of the Lincoln Institute on Land Policy, a leader in driving thinking about land use, urban development patterns, and tax policy in the United States and abroad. In May, the Board went to China to celebrate its 5-year partnership with Peking University in promoting scholarship and policy on land use issues.

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This was my first visit to China. The visit to Beijing and Xi’an gave me a great appreciation of the strides the Chinese have made in the last 20 years while also raising questions about its future and the inevitability of China displacing the United States as the world’s economic powerhouse.

There is no disputing that China’s cities have made tremendous strides. Development is happening at breakneck speed. Major urban centers are popping up across metropolitan areas. Subways and major highways have created transportation infrastructure that rivals, if not surpasses, that in the U.S. This is now a nation of cars, as opposed to bikes.

This clear progress has been driven by the purposeful policies of China’s authoritarian government. But, much of it has proceeded independent of market forces.  So while there are beautiful office towers and condominium high rises across Beijing, many sit empty or not close to capacity. Xi’an, one of China’s many cities of 5 to 8 million people that you’ve never heard of, was even more striking in this regard. (Xi’an’s two thousand year old terra cotta warriors are something to see, though.)

It raised the question of whether government alone can drive growth, and whether it can be sustained.  The answer to the first question is clearly yes.  The 2009 American Recovery and Reinvestment Act, otherwise known as The Stimulus, clearly created jobs and helped prevent our Great Recession from becoming a second Great Depression. And Europe’s austerity measures have hampered the economic recovery there.

I’m rather doubtful about whether government be the focal point for sustained growth, however. And this is the rub for China. At some point, if it is to become the economic power some say it is destined to be, China must transition and become consumer-oriented and innovation driven.  This will mean relinquishing control, and letting people have more self-determination.

 Letting go of the reins will be a radical change in China. I don’t think it’s clear whether the government will be willing to do it. If it does, I’m not convinced that it can be managed. The rise of homeowners associations – a seeming paradox in a country where government owns all land – are but one sign that energy is starting to bubble as people get a taste of spreading their wings.

Keep an eye on China. It could get very interesting. The battle for economic supremacy is only just beginning.

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