As Summer slid into Autumn in 2012, the Chinese
government was giving no hint of any ensuing economic stimulus program. This
was more than slightly unnerving for some, as a recent manufacturing survey had
slumped more than expected, to 49.2 in August. A score of 50 separated expansion from contraction. A similar survey, by HSBC, came in at 47.6, down
from 49.3 the previous month. Bloomberg suggested that China might face a
recession in the third quarter. So why no stimulus announcement? Was the Chinese government really just one
giant tease? I submit that the false dichotomy of moderate economic growth and full employment was in play. In short, the Chinese government did not want to over-heat even a stagnant economy even though the assumption was that full employment would thus not be realizable.
The full essay is at "Economic Growth and Full Employment in China."
