According to neoliberal doctrine, state intervention constitutes the biggest obstacle to a thriving economy, with the free-market and competition as its sole arbiters. Not only has neoliberalism proved a colossal failure, but when the markets reached a breaking point, who came to their rescue? The state. It was precisely that much-despised regulatory entity that bankers, financial deregulators and assorted outlaws, losing at their own game, were bailed out by.

After years of phoney promises, economic stagnation and an entire generation staring blankly into their missing future, Europe and Western economies are on their knees. With social mobility virtually erased and a state-subsidized welfare system gradually disappearing, the West is stomaching the bitter taste of financial collapse.

The widening gap between the haves and the have-nots is not changing the free market ideologues' minds, and old habits die-hard. In a recent article in The Economist (October 6), the bible of free-market idolaters argued that state-owned enterprises (SOE) in China represent a burden on the economy. The article maintains that the stranglehold that the Chinese government exercises over smaller enterprises is crippling the economy while simultaneously discouraging young entrepreneurs. It's the same old story except that now it is being told in the face of a major economic catastrophe, largely caused by exactly the kind of liberal policies the article is championing.

All fundamentalist believers, even those who believe in the free-market, rely on highly irrational tenets. For clarity and rationality's sake, let's have a look at what the state economy meant for China over the past few turbulent years. For an economy such as the Chinese one still heavily relying on manufacturing exports, the impact of changing trends in foreign trade remains very problematic.

If in fact Western export markets were to decrease, the Chinese economy would immediately feel the blow. That is precisely what the 2008 financial crisis could have caused. So much so, the World Bank predicted a fall of almost 2 percent in China's growth rate ("China, On Course for Growth Slowdown", Financial Times, 4 February 2008). Well, the World Bank was very much mistaken; the Chinese economy in fact grew at a staggering rate of 9.6 percent in 2008, 9.1 percent in 2009 and 10.3 percent in 2010. It is vital to keep these figures in mind when analyzing the current decrease of the Chinese economy, which was envisioned as part of the last five-year plan.

The main cause behind this extraordinary growth during the severe crisis affecting Western markets was a $580 billion stimulus package that the Chinese government implemented in November 2008. By trying to boost domestic expenditure and by investing in public services such as education, health and infrastructure, the Chinese government successfully counterbalanced falling Western demand. The government was in the position to do so thanks to its strong finances and robust liquidity.

Had the Chinese government been as bankrupt and debt-ridden as Western governments, the consequences of the 2008 financial crisis on the Chinese economy would have been much worse. The reason why the Chinese government could rely on such a generous amount of cash is precisely because it owns all major companies within the country. What the article in The Economist is then advocating is clearly a failing model that state capitalism in China - far from being an equitable or ideal model - has evidently proved wrong at a time of widespread instability by effectively preserving its own stability.

Not even in the face of contradicting evidence is the neoliberal mantra loosing any of its na?ve arrogance and supremacist attitude. Despite mass unemployment, low-growth economy and falling living standards, privatization remains the ultimate dogma of the neoliberal doctrine. Far from acknowledging its shortcomings, neoliberal fundamentalism feeds on an evangelical charge exemplified by the aforementioned article's subtitle: "Could foreign pressure persuade the new leadership to reverse course?" The Economist article concludes by asking: "Does liberal reform have a chance (in China)?" Who knows? What we should know by now is that its consequences are both devastating and disastrous.

Giovanni Vimercati is a freelance film critic, founder of the Celluloid Liberation Front and critical analyst of world politics. @CLF_Project

Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.

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