The debate about China’s economy, amid all the noise and drama coming from the bursting of its stock market bubble, is essentially about whether its annual economic growth rate might really be 5 per cent rather than the official 7 per cent, or — shock, horror — could actually be as low as 4 per cent, which cannot qualify as a catastrophe. Or it might mean nothing much at all, given that the Chinese stock market is essentially a gambling den that is only weakly connected to the wider economy. So pardon me for failing to get very excited about it. The real reasons to be interested, and even worried, lie in politics, not economics.
Chinese events raise three big political questions. The first has more than a touch of Schadenfreude, admittedly.
For years, we have been told that one of China’s great advantages is that its authoritarian government is better able to make and implement decisions and steer economic change than our feeble, navel-gazing democracies. What we are watching is a test of whether there is any truth in this claim beyond simply the ability to sweep people out of the way when new high-speed railway lines or airports are to be built.