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Sergey Glazyev Shows How China Directs Credit into Productive Growth

April 13, 2023, 2022 (EIRNS)—In his presentation to the Moscow Economic Forum on April 4, on the second session panel, “China. Experience of Modernization for Russia,” (in Russian) Russian Academician Sergey Glazyev focused on China’s credit policy for productive growth, and its elimination of super-profits and bubbles. In a certain part of his speech, Mr. Glazyev stressed:

“China set the foundation for economic growth.... It gives priority to public interest versus private interests. These are not empty words. Indeed, these are the guiding principles for strategic planning.... This is something that is regulated to increase the well-being of the nation.... It is supported by beneficial loans, sometimes with zero-percent interest rates. Those looking for super-profits, those types of activities are repressed. The idea is that the government is setting the strategic priorities.

“Those who do meet the criteria of the economy’s development, get unlimited government support....

“The economists know that investment growth is the key to economic growth.... In China, the investment growth was sevenfold. The loan growth was five fold. Where did it get its loans from? ... The general loan-based growth to the productive sector allowed for a very impressive growth. The level of monetization [to the productive sector] today in China is twice as high compared to Europe and the United States. That being said, we do not see in China the same kind of bubbles, the boom and bust cycles which have long become a characteristic of the Western economies. The growth of investment [in China] necessarily entails a new technology and the lowering of inflation in the long term.”

Glazyev, who greatly admired the physical economic ideas of Lyndon LaRouche, also displayed at the Moscow forum his new book, The Chinese Economic Miracle: Lesson for Russia and the World. In his April 3 review for International Affairs, (in Russian) columnist Alexander Moiseev wrote:

“In the half-century since Deng Xiaoping’s reform and opening-up policy, China has made an unprecedented leap from deep backwardness to leading the world in terms of output and economic development. The population moved from the huts to the best cities in the world in terms of the quality of the living environment. Country roads have been replaced by high-speed rail and highways. From a predominantly agricultural country, with predominantly manual labor, China has become a world leader in the field of intellectualization and robotization of production. The once illiterate population today almost without exception has a higher or specialized secondary education. And this amazing leap in the development of the most populous country in the world occurred in just two generations....

“The combined power of China’s development institutions and the scale of their use to finance investment in the development of both their own and joint ventures far exceeds the investment mechanisms of international cooperation available to other countries. China is becoming a leader in the formation of a new world economic order.”

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