ANOTHER HUGE MERGER IN CHINA

The sheer size of this merger is incredible. According to the Wall Street Journal’s article from July 29, “Beijing Shows Its Power with China’s Latest Megamerger”, China Guodian has enough capacity to light up 183 million American homes. Total assets of the newly create assets will stand at $270 billion.

Many will be impressed by China’s ability to execute such huge mergers as Chinese government is continuing with its efforts to create a unique model of both command and market economy all in one.

COMMAND VS. MARKET ECONOMY – CHINA’S UNIQUE MODEL

History shows that planned (command) economies did not deliver and failed in their competition with market economies, former Soviet Union of course being the prime example.

CREDIT GIVEN WHERE CREDIT IS DUE

China deserves a lot of credit for attempting to create a model that is uniquely suitable for them rather than blindly copying the Western models.

However as the Journal says: “…in the long run, letting market signals dictate capital allocation rather than creating larger state-owned behemoths is a better way for China to reform…”

WILL CHINA SUCCEED?

Only time will tell if China will succeed with its unique economic experiment. In the meantime, it manages to captivate academics, governments and business people alike.