China's stock market bubble has finally burst. The Communist leadership's attempt to control the economy has been shown up for what it is: the cause of chronic malinvestment. Once again, the hubris of central planners has made entire populations poorer.
The Chinese people are no strangers to suffering brought on by the economic insanity of their leaders. Chairman Mao – the worst mass murderer in human history – tyrannised the population through authoritarian central planning. His 'Great Leap Forward' ended up killing 45 million people in four years.
China's progress from a country in economic catastrophe to a global superpower in a few short decades is down to one thing: market forces. By liberalising the economy, making room for private enterprise and private investment, the Chinese government unleashed astonishing productivity growth and wealth creation.
But let's keep a sense of perspective: China is not a free country. People are still denied basic liberties and rights. The Government is still authoritarian and all-powerful – unchecked by either the people or the rule of law. The State still manipulates the economy. The idea that modern China has escaped its Communist past is a myth.
The dangerous results of the latest round of Chinese central planning are now coming to light. Huge new ghost cities – built by regional governments trying to keep up with national growth targets – that no one can afford to live in. A vast asset bubble, and an ever bigger mountain of credit. Enormous fiscal and monetary intervention by Chinese authorities failing to stop the rot. China is facing a serious economic correction ahead – and there is nothing the State can do to stop it.
Western commentators are facing a correction too. During China's boom, pundits were quick to jump on the bandwagon, telling us that big statist projects and contempt for liberal democracy were the way forward after all. They ignored the fundamental reason the West has been economically supreme for so long: free enterprise, and limits on the power of the State.
China's crash should be a wake-up call for the West: the only route to prosperity is to set the economy free.
"A revolutionary text ... right up there with the Communist manifesto" - Dominic Lawson, Sunday Times
Printed by Douglas Carswell of 61 Station Road, Clacton-on-Sea, Essex