The two China policies
By Scott Sumner
There has been some migration to southern China, but nowhere near enough to fully explain this divergence. The southern provinces really have done better, even in per capita terms.
The Economist provides a number of explanations for this gap, but barely even alludes to the most important; southern China is considerably more capitalist than northern China. That oversight would not have occurred in the Economist I read when I was young. Someone should revive the Far Eastern Economic Review.
PS. Of course there are more than two Chinas. Taiwan is even more capitalist than the southern mainland, and is even richer. Hong Kong is even more capitalist than Taiwan, and is even richer. Funny how that works.
PPS. I said, “barely even alludes to” as this is the only reference to free market policies in the article:
In 2013, the peak of China’s building frenzy, investment in assets such as roads and factories reached an eye-watering 66% of gdp in the north versus 51% in the south. Southern officials have been more hands-off.
PPPS. I see a lot of talk about China’s “industrial policy”. FWIW, there’s more industrial policy in northern China than in the south.