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標題: Who cares [打印本頁]

作者: norman.ho 時間: 2011-11-8 03:56 PM 標題: Who cares

本帖最後由 norman.ho 於 2011-11-8 03:59 PM 編輯 . V% c8 u0 K2 x* f2 b7 ~

Cannes showed how power has shifted to Beijing; i2 Y8 F# s; L; d) i Y7 I
The G20 summit proved that China has overtaken the west – and acquired some of its problems on the way0 X% U: `8 M- ^) o' ]0 [; t
Larry Elliott, economics editorTVBNOW 含有熱門話題，最新最快電視，軟體，遊戲，電影，動漫及日常生活及興趣交流等資訊。3 S+ @1 v" w& H5 K1 ~! A; k; f& g
guardian.co.uk, Sunday 6 November 2011 20.00 GMT
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China's economic boom could be more fragile than it looks, tvb now,tvbnow,bttvb) l6 g3 E) x' z2 p3 K! x
with problems looming such as a property bubble, too much industrial capacity and corruption.% W$ W2 g* E |
Photograph: Reuters

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The global economy has three main pillars: the United States, the European Union and China. America was where the crisis began, with a housing market bubble that corrupted the financial sector. Europe is where the crisis now has its locus, amid fears that the single currency could break apart. China, despite steaming ahead since the slump of late 2008, may be next.
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The fact that China is now pivotal says much about developments in the decade since it emerged as a fully fledged market economy as symbolised by membership of the World Trade Organisation. Financial meltdown in the west and east Asia's rapid growth have altered globalisation's terms of trade, leading to a shift in the balance of power as fundamental as that of a century ago.
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Back in 2001, the running of global affairs was still firmly in the hands of the United States, Europe and Japan, but even then there were signs of change. China had already enjoyed two decades of spectacular expansion by the end of the 20th century and that has continued in the first 11 years of the 21st. Economic power translates into political clout and China now has a seat at the top table when the great powers meet in conclave, as they did at the G20 in Cannes last week.

Unsurprisingly, the focus of events was the unfolding crisis in the eurozone but it was hard to escape the sense that power had shifted from west to east over the past 10 years. It was not just that Nicolas Sarkozy and Angela Merkel were holding out the begging bowl, pleading with China to dip into its foreign currency reserves to provide capital for Europe's bailout fund. Nor was it that China's leaders felt entirely comfortable lecturing Europe on the need to get its act together when it was not so long ago that it was the other way around.
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Rather, it was the mixture of bemusement and derision with which China viewed last week's events: the referendum in Greece that never was, the ratcheting up of market pressure on Italy, the looming recession, the inability to follow through on the rescue plan announced in Brussels 10 days ago. Comparisons were being made with the way in which Asia coped with its financial crisis in 1997-98 – and they were not flattering to Europe.
TVBNOW 含有熱門話題，最新最快電視，軟體，遊戲，電影，動漫及日常生活及興趣交流等資訊。5 J! z3 F  {4 ~+ R
One small vignette perfectly summed up how small-minded and weak Europe has become as a result of its relative economic decline. Officials working on the summit communique were discussing Sarkozy's plan for a financial transaction tax (FTT), the proceeds of which the French president believes should be used to boost aid budgets and to help poor countries adapt to climate change.

Germany, despite an unimpressive recent record on development assistance, likes the idea of an FTT but only because it wants to use any money raised to reduce its budget deficit. So Merkel's sherpa argued that any mention of linking the so-called Robin Hood tax to aid should be removed from the text. In the end a compromise of sorts was agreed so that the communique finally read: "We acknowledge the initiatives in some of our countries to tax the financial sector for various purposes, including a financial transaction tax, inter alia to support development."

The words "inter alia" were included at the insistence of the French but mean that even if Sarkozy manages to put together his coalition of the willing for an FTT it will be up to individual countries what they do with the additional dosh. It is a fair bet that very little of it will show up in higher aid budgets, making it easier for China to portray itself as the friend of developing countries by bankrolling their infrastructure projects. Yet Europe's weakness represents a problem for China as well as an opportunity. Beijing's export-led model of economic growth depends on having a ready market for the goods being churned out by Chinese factories, so the impending recession in the eurozone will have an impact.5.39.217.76/ a5 [) y3 s- ], _/ N+ Z
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To an extent, the backwash from Europe – and from the still-tepid recovery in the US – will be beneficial, since it will encourage China to rely more heavily on domestic demand as a source of growth. That will mean allowing its currency, the yuan, to float higher on the foreign exchanges, encouraging consumers to buy cheaper imports while making exports dearer. In the short run, such a move will help defuse protectionist sentiments in the US. In the longer run, it will lead to a rebalancing of the global economy.7 T( g- Z) g- E

But it won't happen overnight, not least because China's economy is more fragile than its near double-digit growth rate would suggest. Back in 2008, when the crisis broke, industrial production collapsed around the world.

Chinese unrest

Chinese factories were mothballed and the workers laid off. China's communist leaders well understood the potential for serious social unrest so they ordered Chinese banks to keep the economy moving by expanding credit. At one stage, the annualised increase in credit growth in China hit 170%, almost certainly the biggest such surge there has ever been.3 \4 V' v, [; V. k6 O" |

The result was over-investment on a colossal scale: not just in industrial capacity but in property. China is now awash with factories that will struggle to make a profit and with a glut of overpriced housing. Historically, an uncontrollable rise in credit has been the single best indicator of a financial crisis, as the west knows from its own recent experience.

Can China buck this trend? Well, it is interesting that many of the arguments along the "this time it's different" line propounded in the US in the mid-2000s are now being trotted out again. The fundamentals justify elevated property prices, just as they did in the US. There is exaggerated confidence in the ability of the People's Bank of China to finesse a soft landing for the economy, just as there was in the ability of the "maestro" Alan Greenspan to prevent the American bubble popping a decade ago. There are booming echoes of the sub-prime crisis: too much leverage, property being sold at distressed prices, and evidence of wrongdoing.5.39.217.769 o% s5 ?; |/ k* h) b+ P
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The authorities in Beijing are now responding to signs of weakness in the property market in classic Greenspan fashion: they are relaxing the constraints on credit that were imposed both to mop up excess liquidity in the banking system and to bring down inflation. This, sadly, no more guarantees a soft landing than did Greenspan's decision to solve the problem caused by the collapse of the dotcom boom by creating an even bigger bubble in the US housing market. As an analyst noted last week, China is like a plane with engine trouble circling round an airfield until the fuel runs out.# Q* j/ S5 A/ I2 F+ b+ [& F& ]

A crash landing is likely but not necessarily imminent, because loose monetary policy may disguise the underlying problem for a while, as it did in the US. Nor will it permanently impair China's economic development; America had plenty of spectacular boom-busts when it was emerging as a superpower in the late 19th and early 20th centuries.TVBNOW 含有熱門話題，最新最快電視，軟體，遊戲，電影，動漫及日常生活及興趣交流等資訊。. V  u; S4 }" H* [. \$ b

It does mean that Europe's problems come at an unfortunate time for China, which is facing the twin problems of over-investment and overheating, and is vulnerable to even a relatively mild double-dip recession in the west.
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After reading this, I find this song is quite appropriate:tvb now,tvbnow,bttvb6 `$ Y1 b- E$ C2 T: n" {* v
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