Banks in China still operate under market logic, and it the very market logic, which is poisonous here. State ownership just allows the state to act, if it recognizes the problem.
Market is just an allocator, it’s a useful tool for doing dynamic balancing, but the market operates within the framework of the state plan. Hence my example of how real estate was wound down in favor of industrial development. If the market made final decisions we would’ve seen very different outcomes.
Banks in China still operate under market logic, and it the very market logic, which is poisonous here. State ownership just allows the state to act, if it recognizes the problem.
Market is just an allocator, it’s a useful tool for doing dynamic balancing, but the market operates within the framework of the state plan. Hence my example of how real estate was wound down in favor of industrial development. If the market made final decisions we would’ve seen very different outcomes.