Magazine article Foreign Policy

Que Pasa, China? Why China's Boom Might Take a Siesta

Magazine article Foreign Policy

Que Pasa, China? Why China's Boom Might Take a Siesta

Article excerpt

[ILLUSTRATION OMITTED]

CHINA AND MEXICO aren't often mentioned together these days. One is seen as an economic dynamo with a highly efficient, if authoritarian, political system; the other as a stagnant, crime-ridden basket case. But the two countries actually took very similar paths over the last three decades, which raises important questions about why the results have been so dramatically different.

Under Chinese leader Deng Xiaoping in the late 1970s and Mexico's PRI party in the 1980s, both countries undertook massive economic reforms designed to better take advantage of the vast U.S. consumer market, economists Timothy J. Kehoe and Kim J. Ruhl point out in a new paper for the U.S. Federal Reserve. By 1995, each seemed to be on the way up: Mexico's manufacturing sector even kept pace with China's legendary industrial productivity. But from 1985 to 2008, Mexico's real GDP per working-age person grew just 10 percent; China's grew by an astonishing 510 percent. …

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