Mises Institute President Doug French, reviewing what looks to be an interesting new book on the subject, has this to say:
Chinese economic growth has exploded on the shakiest of financial systems, Carl E. Walter and Fraser J.T. Howie point out in Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise. The country’s central planners do their best to keep as many of the 1.3 billion people employed as they can; building vacant cities and dozens of large infrastructure projects along with releasing eye-popping “official” GDP numbers. All of this has some observers believing China will use every barrel of oil, yard of cement, and pound of yellowcake the world has to offer.
Nonetheless, reading Howie and Walter’s eye-opening book makes a reader wonder how the whole Chinese economy hasn’t imploded already. The Chinese have developed stock markets and debt markets, pension funds, home loans, and credit cards. From afar it looks sort of like capitalism, providing comfort to investors. However, the authors point out; “[Investors] would not feel that way if China explicitly relied on a Soviet-inspired financial system even though, in truth, this is largely what China remains.”