In the tussle over the merits of stimulus spending Keynesian economists (like Krugman and DeLong) regularly point to austerity measures in Ireland, Spain, Greece, et al. to say "See what a mess austerity gets us into." They mean sustanined unemployment and meagre growth. Now we have the editorial board of the Wall Street Journal pointing to China as if to say "See what a mess stimulus spending gets us into." They mean inflation and imminent bust.
Some of the figures they cite are impressive: 15% GDP spent on infrastructure in inland areas. If true, this would be truley impressive. At the height of the construction boom in 2006, total construction in the U.S. was about $1.2 trillion, or roughly 9% of GDP.
No matter what, watching economic developments in China for the next few years promises to be interesting.
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