China, China everywhere
We're all living in China's world now. How's your Mandarin?
- First, Brussels is playing host to a major festival about China. As Paul Ames reported, Chinese artists, musicians, writers, filmmakers, acrobats, puppet masters, marital artists and even tea makers are flooding Brussels. Over the next four months more than 50 exhibitions and 400 concerts, plays and events will showcase Chinese creativity, from the beginnings of civilization to the raw experimentation of today’s thriving art scene.
- This follows China's starring role at the Frankfurt Book Fair earlier this month, which as Cameron Abade reported, turned into a raging debate over China's poor human rights record.
- And on the lowbrow culture front, there are the dwarves. We learned this week from Kathleen E. McLaughlin about The Kingdom of Dwarves — a theme park in Kunming that features singing and dancing "little people," who must all be under 4' 3" tall.
So why is China dominating the news from Wall Street to Washington to Wakhan?
It starts, of course, with economic power. China's handling of the global economic crisis has given it renewed credibility across Asia and throughout the world. Sure, thousands of Chinese factories closed last year, and as a result some 20 million migrant workers lost their jobs. But the government acted swiftly, rapid growth has returned, and with it, so too has the swagger of Beijing's leaders.
That economic power, naturally, leads to greater political influence. As the most important buyer (along with Japan) of U.S. Treasuries, Washington's ability to finance its dizzying spending is in large part dependent upon Beijing's continued willingness to purchase, and hold, them.
But China's rising influence also matters in Moscow, Tehran, Tokyo, Brussels, Brasilia, Caracas and across Africa and the Middle East, where Beijing is investing like mad to procure the natural resources it needs to fuel growth.
Hence the flood of China news from all corners of the world. Global media, after all, is a mirror on these economic, political and cultural realities. So in the weeks, months and years ahead expect China news to be the rule, rather than the exception.
And if you'll pardon me going all History Channel on you, this 1803 quote attributed to Napoleon Bonaparte has become something of a cliche in 2009, but it still rings true:
"Let China sleep, for when the dragon awakes she will shake the world."
As we've seen this week, she's awake. And while this new world will surely be bumpy and full of surprises — for China as much as anywhere else — we will all need to live in it without shaking.
Thomas:
I have lived in China for 5 years, and I speak Mandarin.
Your article "China, China everwhere" is nicely framed and fun to read, but it overestimates the strength and sustainability of China's export-led, state-corporatist model.
The numbers which the National Bureau of Statistics released last week were either misreported, misleading or false.
"it is unlikely that 3Q expansion was anywhere near the claimed 8.9%," writes Gordon C. Chang, a Forbes' columnist. "This claim is not consistent with other statistics."
"The economy, for example, is still dependent on exports: Before the massive government spending, about 38% of GDP was attributable to sales abroad. Yet exports tumbled 23.0% in July, 23.4% in August and 15.2% in September."
Chang also questions the supposed 17% Q3 growth in retail.
Chang thinks that chances are high that the government simply bought these “retail items” and either stored them in warehouses or parked them in State parking lots.
Huang Yasheng, a professor at Massachusetts Institute of Technology and the author of the the recently published book Capitalism with Chinese Characteristics, concludes that the massive stimulus package ($586 billion USD) has been funneled predominantly to state-owned corporations and the government bureaucrats who live off them, while fragile household consumers who received none of the largesse have become weaker.
China has not yet restructured its economy from an export-led, state-corporatist model. If the U.S., Europe and Japan are buying substantially less from China since the slowdown, how can an export-led economy grow at 8.9%? Either consumers or the government have picked up the slack. Huang illustrates that the stimulus just made the consumers weaker. Therefore, the Q3 GDP value (whatever it happens to really be) has been propped up with loans from state-owned banks to state-owned corporations and their favored projects.
This wasteful spending, as Michael Pettis argues, only further hurts household consumers in China. Why? Consumers in China will ultimately pay for these wasteful investments with low bank interest rates, higher taxes, etc. when overcapacity results in bad bank loans.
You can read my complete post here.
http://www.chinamanufacturingblog.com/2009/10/china-stimulus-strengthens...
Regards,
Dan
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