China’s Secret: Hamiltonian System, Anyone? —

Sept. 29 (EIRNS) – Italian economist and China expert Michele Geraci explained why, in his view, Evergrande won’t unleash a systemic crisis for China.

 “China can manage crises because it controls all necessary macro-economic variables, which have been denied to us. … Here is the list of what they have and what we don’t:

•  1. They issue their (own) currency (and we don’t).
• 2. They decide at a table the interest rate curve.
• 3. They have no deficit constraints.
• 4. They decide currency exchange at a table.
• 5. They control current accounts through independent trade policies.
• 6. They control capital in- and outflows.
• 7. They do not have an international currency, thus they are not captive to Wall Street.
• 8. Lastly, the key is that they have no big foreign debt.

… That is why Evergrande won’t be, in my view, a systemic risk…”

The reader knowledgeable in the American System of Political Economy will recognize major features of a Hamiltonian system of credit and trade policies in these Chinese policies.