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No Solution for China’s Economic Problems

An article that spread widely on the Internet argued that, without human rights and a system of law, there will be no economic prosperity. Therefore, there is no solution for China’s economic problems.

"A mainstream of belief in finance is that currency is created by credit. "How is credit created? ‘Human rights create a market and the rule of law creates credit.’ The foundation of a market economy is equal exchange. Without human rights how can you and I accomplish an equal exchange?

"Only when the king cannot take over your property at will can he be forced to buy it from you. Then a market economy will exist. If there is a super power, not only will the super power not trade with you equally, but neither will anyone in the market. If the king can just confiscate people’s property at will, why should a person try to work hard to make money? Wouldn’t it be faster if that person just flattered the king so he would confiscate some other people’s money instead? Therefore, without human rights, the order of a market economy will be damaged. People will go after power. They will not use the means of fair competition to make money.

"Human rights creates equal trade; trade creates a market. It is just that equal trade is not enough. If people trade with each other equally, then they can cheat each other equally, too. This will make the cost of trade too high. How can they expand credit? They can’t just rely on conscience; they must also rely on the rule of law. The rule of law can create a modern financial system. China’s financial system is not fully developed. The main reason is it lacks the rule law.

"China’s law system is not just unable to support the modern financial system; it is unable to support even basic credit activities."
Source:  Amazon