China's success has not come without cost. Income disparities have widened, owing in part to the continuation of distortionary policies in various sectors, including the domination of China's four large state-owned banks, the near-zero royalty on mining, and monopolies in major industries, including telecommunications, power, and financial services. Because such distortions (a legacy of the dual-track transition) result in income disparities, they ultimately repress domestic consumption and contribute to China’s trade imbalance. Those imbalances will remain until China completes its market transition.
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