Point-Counterpoint: Long-Term Growth in China
The Case Against: Made by the juxtaposition of two stories today. One, from the Globe-and-Mail, concerns a PSB (internal security) investigation into, and arrest and detention of, a Canadian short-seller of Chinese Silvercorp. The key twist in this story is that the PSB operation was actually funded by Silvercorp, who even took receipts to reimburse their expenses. I can’t imagine a more breathtaking intersection of crony capitalism, bureaucracy gone haywire, and the possibility of massive “toxic assets” infesting the Chinese financial system. The other concerns the probable next Premier of China, Xi Jinping. He has disappeared from public view with no explanation, with even rumors about medical issues being clamped down by social-media censors. Neither of these stories suggest a political economy that will provide a platform for long-term growth.