1/4
For János Kornai, “the softening of the budget constraint is an indicator of the fact that many basic allocative and selective processes are not left to the market, but are highly influenced or taken over by bureaucracies and political forces.”
kornai-janos.hu
For János Kornai, “the softening of the budget constraint is an indicator of the fact that many basic allocative and selective processes are not left to the market, but are highly influenced or taken over by bureaucracies and political forces.”
kornai-janos.hu
2/4
This is important in the Chinese context because it implies that as the gap widened between the GDP growth target and the rate at which the economy could productively grow, an increasing share of economic activity had to operate under soft budget constraints.
This is important in the Chinese context because it implies that as the gap widened between the GDP growth target and the rate at which the economy could productively grow, an increasing share of economic activity had to operate under soft budget constraints.
3/4
This, in my opinion, is why we’ve seen in the past decade a growing state-sector share of the economy and a declining private-sector share, and not because of any ideological change among Beijing policymakers towards market forces.
This, in my opinion, is why we’ve seen in the past decade a growing state-sector share of the economy and a declining private-sector share, and not because of any ideological change among Beijing policymakers towards market forces.
4/4
Contrary to those who claim that the Chinese economy was growing healthily until policymakers shifted their attitudes towards the role of markets, in other words, I would argue that the this “shift” was already implicit in China’s unbalanced growth model after 2005-10.
Contrary to those who claim that the Chinese economy was growing healthily until policymakers shifted their attitudes towards the role of markets, in other words, I would argue that the this “shift” was already implicit in China’s unbalanced growth model after 2005-10.
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