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.