Biweekly Symposium] No. 587: Misallocation in Space as the Flaw of China's Economy.
Lecturer: LU Ming
Commentator: CAI Jiming, ZHAO Zheng, ZHENG Yanting
Professor LU Ming firstly emphasized the importance of misallocation in economics. He thought multiple misunderstandings are derived from resource misallocation in a country so big like China. He then offered his take on the New Normal, where economic slowdown is taken as an issue of misallocation. It is, therefore, not a new normal, or a cyclic phenomenon. What’s at issue concerns two resources, construction land and capital. He thought the misallocation of these two resources in coastal and inland areas has resulted in an imbalanced development model. He stated that we should not mistake the balance of scaled development for the balanced development per capita. Another misunderstanding has to do with the blind faith in the power of government instead of the market. By using detailed statistics, graphics, and thorough analysis of the trends in capital and debts, China’s TFP, supply and demand of land, and local debts, Professor LU Ming made a persuasive case against the conventional development model that stressed the balance between localities instead of balance between resources per capita across the country.