Financial Times, 5 January 2015.   https://next.ft.com/content/b476911e-b2ef-11e5-b147-e5e5bba42e51

张化桥在英国金融时报撰文: 让股市退烧, 让改革前进; 中国的供给侧改革还不完美, 但是方向正确, 可喜可贺!

China should celebrate the collapse of its stock market. That was not the instinct of officials last summer when the Shanghai Composite index lost close to one-third of its value in four short weeks.

Back then, Beijing launched investigations into what it called “malicious short selling” and spent $200bn to prop up falling equity prices. But give the Communist party its due. When one trick stops working, officials are not shy to admit it.

The Shanghai Composite fell 7 per cent on Monday; further falls are likely. Yet we are unlikely to see more of the heavy handed intervention to which officials resorted in 2015. This is not because Beijing does not have the means to prop up the index, but rather because officials have come to believe it desirable for high stock market valuations to be unwound. Large sections of the public are beginning to agree with them.

The most salutary moments in Chinese politics often involve such sharp reversals. It was, after all, the realisation that four decades of central planning had produced only backwardness and starvation that led Beijing to abandon Soviet-style governance in the 1980s.

Since then the country has pursued an industrial policy that has transformed China from an impoverished agrarian backwater into a manufacturing powerhouse that is one of the world’s largest economies. It is a formidable turnround — even if it has consumed vast resources, polluted the environment and yielded less of an improvement in living standards than might have been expected.

In recent years that strategy, too, became untenable, as corporate debts piled up and financial returns diminished. In the meantime, a growing number of local governments were troubled by unsustainable debts.

Things came to a head in 2014 when, with none of the theoretical spinning that usually accompanies a major change of policy in Beijing, officials began to see what they could do to pump up the stock market. The idea was to stimulate the economy without the huge burden of public spending that would come attached to a programme of fiscal stimulus.

The trouble with this approach is that the public foots the bill, not via the tax system, but through the more insidious form of redistribution that occurs when an investor buys shares at a price that has temporarily been inflated by official action. From the beginning, this policy was on questionable moral ground. It was becoming increasingly perilous, too, because the faster the stocks rose, the harder they could fall.

Even after yesterday’s sharp fall, the Shanghai stock market index is more than 40 per cent higher than it was for two years before prices began to take off in late 2014. Shares are likely to fall further. That will be painful for investors. But, outside the financial markets at least, it need not lead to drama.

Realising this, President Xi Jinping is again changing course and has begun touting the virtues of supply-side reform. This looks like a sure sign that Beijing has had its fill of stock market tinkering and is turning instead to a watered-down version of Reaganomics.

The new policy has two major elements. The first involves making it easier for business to operate by eliminating tedious bureaucracy. The second entails giving the private sector a bigger role in public works projects, which in the past have been dominated by notoriously corrupt state-controlled firms.

These are good ideas as far as they go. But the government is showing no sense of urgency, and even if it did, such limited measures are not nearly enough. Tax cuts and privatisation should also be on the agenda.

Still, as the Chinese have discovered on their long journey to prosperity, when you are hungry, half a loaf is better than none.

The writer is author of “Party Man, Company Man: Is China’s State Sector Doomed?”