perda04
Well-known member
China's hard landing
Economic vulnerabilities
The real problem for the leaders in Beijing isn't just the here and now. Many large multinationals seem to think that once this global downturn ends, China will go back into hyperdrive, growing at 10% and moving millions of citizens a year from near poverty to something resembling middle-class status. That's probably a fantasy. Even absent the U.S.-led global crisis, China's leaders knew that the comparative advantages they leveraged into rapid growth - vast amounts of relatively well-educated low-wage labor, a welcoming attitude toward foreign direct investment, and exports, exports, and more exports - had pretty much run their course. China's current-account surplus hit a record 8% of GDP in 2008; going higher would probably have brought a serious backlash from its trading partners. The jig was up.
...
Stunned and a little angry - which, since China is now by far America's largest creditor, is not an idle point. After a recent speech in New York - and, it must be said, with a smile on his face - Luo Ping, an official at the China Bank Regulatory Commission, told a Financial Times reporter, "We hate you guys, but there is nothing much we can do." Except continue to buy Treasury debt. To repatriate China's foreign exchange, earned via its massive trade surplus, would only drive up the value of its currency, the renminbi, making the nation's exports more expensive in the midst of the biggest global slump since the early 1980s. That's the equivalent of throwing an anchor to a drowning man, and it won't happen.
Economic vulnerabilities
The real problem for the leaders in Beijing isn't just the here and now. Many large multinationals seem to think that once this global downturn ends, China will go back into hyperdrive, growing at 10% and moving millions of citizens a year from near poverty to something resembling middle-class status. That's probably a fantasy. Even absent the U.S.-led global crisis, China's leaders knew that the comparative advantages they leveraged into rapid growth - vast amounts of relatively well-educated low-wage labor, a welcoming attitude toward foreign direct investment, and exports, exports, and more exports - had pretty much run their course. China's current-account surplus hit a record 8% of GDP in 2008; going higher would probably have brought a serious backlash from its trading partners. The jig was up.
...
Stunned and a little angry - which, since China is now by far America's largest creditor, is not an idle point. After a recent speech in New York - and, it must be said, with a smile on his face - Luo Ping, an official at the China Bank Regulatory Commission, told a Financial Times reporter, "We hate you guys, but there is nothing much we can do." Except continue to buy Treasury debt. To repatriate China's foreign exchange, earned via its massive trade surplus, would only drive up the value of its currency, the renminbi, making the nation's exports more expensive in the midst of the biggest global slump since the early 1980s. That's the equivalent of throwing an anchor to a drowning man, and it won't happen.
