Thursday, May 17, 2012

There Is No Technocracy: China Central Banking Edition

. Thursday, May 17, 2012

David Daokui Li -- former member of the Bank of China's Monetary Policy Committee -- has an op-ed in the FT in which he says that central bankers are subject to political constraints:
First, central bank independence is an unhelpful superstition. In theory, independence is a good defence against pressures from politicians facing re-election. The PBoC is under the control of the state council, and not run under by autonomous bank staff. This may suggest that Chinese officials are subject to strong political whims. ... 
Knowing this, I was nevertheless shocked when the Chinese premier recently said that only two factors had the potential to undermine his government: corruption and inflation. He does, of course, have some influence over these factors.
No surprise to regular readers of this blog, I hope, but this is even more interesting in light of the fact that China's government is supposedly comprised of wise bureaucrats whose insulation from political pressures allows them to pursue optimal policy.

Guess not.


There Is No Technocracy: China Central Banking Edition
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