David Ignatius
October 17, 2008

WASHINGTON — We are all Chinese now. That is, we have a nominally capitalist economy, but we don’t trust the freewheeling private market when it comes to the crunch. So we turn to the government for protection and stability.

  • A d v e r t i s e m e n t

The new interventionism isn’t so much socialist as it is Confucian — a belief that a public-private partnership of the wise ones will get us out of the mess. And if it’s any consolation, the Chinese are becoming more like us, even as we are becoming more like them.

A Chinese preview of this week’s government-funded recapitalization of the banks came in the Hong Kong stock market crash of August 1998. To counter a typhoon of speculation that had battered the local market, Chinese authorities intervened to buy up sagging stocks with public money. The government spent $15.1 billion to acquire about 7.3 percent of the companies in the blue-chip Hang Seng Index.

Back in 1988, free-market partisans in the West were shocked by the Chinese intervention, and decried it as a dangerous precedent. But it helped stabilize the Hong Kong market. Now, that earlier bailout seems modest indeed — compared to the quasi-nationalization of the world’s leading banks we’re seeing this week.

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