[Rhodes22-list] POLITICAL:Change of Pace.....China Editorial NYTIMES

[Brad Haslett]

Ben,

Thanks for the article.  When you decide to go take a look for
yourself, I've got your housing needs covered.  Round trip airfare is
around $1300.  Taxi cabs are cheap and the public transportation
system in Beijing is very, very good.

Brad

On Mon, Oct 27, 2008 at 9:04 AM, Ben Cittadino <bcittadino at dcs-law.com> wrote:
>
> Brad (and any other "China Hands");
>
> Caught this in the NYTimes this AM. Thought you might be interested.
> Accurate?
>
> "As China Goes, So Goes ...
> Editorial
> Published: October 26, 2008
> As the world tips into recession, China's economic decisions could affect
> how other countries fare in the downturn.
>
> Over the last 30 years, China has hitched its economy to the industrial
> world, exporting cheap goods to the United States and other developed
> nations, building up an enormous trade surplus that will hit about $400
> billion this year. As those industrial economies sputter, China is now in a
> position to pick up some of the slack: selling more of its own goods at home
> and buying more from the rest of the world.
>
> To get China's consumers to spend, the government will need to spend more at
> home, investing in public works projects and providing more social benefits
> — including health insurance and pensions — so its citizens don't feel they
> have to save so much for a rainy day.
>
> This is clearly in Beijing's interest, though China's leaders are still
> clinging to the old export strategy.
>
> China is already feeling the impact of a slower world economy. Both economic
> growth and export growth have braked sharply. The slowdown threatens job
> creation, direly needed to absorb millions of rural Chinese seeking
> employment in the cities.
>
> Over the summer the Chinese central bank put an end to its short-lived
> policy of allowing the yuan to gradually appreciate against the dollar, a
> policy aimed at reducing inflation that would also raise the price of
> Chinese exports. Last week, the Chinese government announced that it would
> increase its rebates on taxes charged to exporters — giving them a further
> boost.
>
> But trying to capture a bigger share of shrinking markets in the United
> States, Europe and Japan — just as they tip into recession — won't provide
> China much of an economic lift. What it will do is contribute to the
> slowdown in the rest of the world by hogging demand. China would get much
> more bang for the buck if it focused on stimulating its own domestic markets
> for goods and services.
>
> Given the desperate mess Washington has made of its own financial system,
> few countries are eager to take American advice these days. After years of
> Congressional China-bashing, Beijing may be especially resistant.
>
> Still, it is in China's interest to change. China has grown 13-fold over the
> last 30 years, thanks to hypercharged exports and white hot investment. But
> its economy is lopsided. Consumer spending amounts to little over a third of
> economic production, probably the lowest share in any country in the world.
> And its overwhelming dependence on exports has made it overwhelmingly
> vulnerable to changes in world demand.
>
> The government in Beijing, which is running a huge budget surplus, also has
> money to spare.
>
> The government has announced some measures to fuel domestic spending
> —including a tax cut on home purchases to revive an ailing housing market
> and a vague plan to invest in public works. But it must do more to unlock
> the savings of its citizens and encourage them to spend.
>
> To do that it needs to rebuild the system of social insurance that fell
> apart when state-owned industries collapsed and were replaced by the private
> sector. Government investment in things like health care, education and
> pensions would help develop China's middle class and its domestic market.
>
> A boost to consumer spending would undoubtedly help China weather the
> economic storm. But by raising Chinese imports and reducing its dependence
> on exports, it would also help the rest of the world."
>
> Ben C.
>
>
>
>
> --
> View this message in context: http://www.nabble.com/POLITICAL%3AChange-of-Pace.....China-Editorial-NYTIMES-tp20188395p20188395.html
> Sent from the Rhodes 22 mailing list archive at Nabble.com.
>
>
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