Healthcare in China

May 17, 2009

David Leonhardt has a great piece about China in the NYT Mag.  The highlight for me:

And households increased their own savings in the 1990s, in reaction to the dismantling of many bloated state-run companies and the cradle-to-grave benefits, known as the “iron rice bowl,” they once provided to their workers. When a Chinese citizen is rushed to the hospital after a car accident today, the first stop for the victim’s family is often the cashier’s window. Many hospitals won’t admit patients until they have paid, and many families have no health insurance. Instead, they insure themselves, by saving.


There have recently been some signs that China has become more serious about dealing with its imbalances.


And China has announced a plan to provide health insurance to hundreds of millions more people over the next three years. Jim O’Neill, the chief economist of Goldman Sachs, recently wrote that the health care expansion could prove to be “the most important development in the world economy.”

I would completely agree with Mr. O’Neill.  More consumption from China’s own population is the only solution to our trade imbalance, a depressed Renminbi, and I would even argue the stagnating wages in the U.S.

Providing a health safety net will allow Chinese to spend more of their earnings which (exactly opposite the U.S.) is exactly what we need.

How ironic that an old power and the new kid on the block will be tackling this problem side-by-side.  Of course they have the ‘advantage’ of centralized control while we are hampered by politicians who work exclusively for big business, and a media that muddles issues and misinforms, all in the name of quarterly profits.

So, will we rise to the occasion, or will China beat us to it?  What would that say about our long term competitiveness?

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