In an article just published in the East Asia Forum, Christopher Findlay and Chunlai Chen (a PhD graduate of the University of Adelaide, now at ANU) argue that the Chinese economy faces two fundamental challenges. One is the risk of a financial crisis. The other, possibly more difficult to deal with, is resistance by the bureaucracy in China to support reform that would reinvigorate growth. They note the general perception that China’s bureaucracy lacks the capacity to deliver reform, but argue that this apparent lack of capability in the bureaucracy may actually be the consequence of efforts to outlaw corrupt practices, which has scared public officials away from implementing big reforms. This is because of the resistance to reform from vested interests, who may use the platform of the campaign to vilify the proponents of change. One solution to this, they suggest, could be an amnesty on past practices with a cap on the scale of impacts of previous decision-making. Another option, they say, may be to drive reform from a newly created set of government agencies specifically charged with that role. The full article is available here.
Adelaide Economic Policy Forum