Thursday, February 23, 2012

From My Cold, Dead Hands...

Much has been discussed about the need for China to rebalance their economy away from fixed asset investment towards domestic consumption. The future of the Chinese economy, and implicitly their political and social stability, appears to be in the hands of a relatively small elite who run the state owned enterprises (SOEs).  

But with  the lack of a social safety net provided by the government and growing lack of jobs outside of the SOEs, consumers aren't buying. Privitising the SOEs might be the most effective way to energize the small and medium enterprise business sector, unlock resources needed to once again recapitalize banks and initiate a social safety net, and finally create the rebalancing path needed to move away from an investment led economy.

Sounds good on paper, but maybe the warlords of China's past are now SOE leaders and their entourage? They have a gold egg laying machine and they will not give it up without a fight. They have influence at the highest level of leadership and likely view their SOE power platform as a province of their own. The path to a stable and growing China is through these wealthy mooks and their grasp on power brings up images of Charlton Heston barking for the NRA.   


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