“China has succumbed to hubris”
Hat tip to Richard for pointing the way. We’re on a bit of a theme here at the moment, and this article by Ambrose Evans-Pritchard at the Telegraph is well worth inclusion for asking the question: is China spoiling for a fight? A taste:
China has succumbed to hubris. It has mistaken the soft diplomacy of Barack Obama for weakness, mistaken the US credit crisis for decline, and mistaken its own mercantilist bubble for ascendancy. There are echoes of Anglo-German spats before the First World War, when Wilhelmine Berlin so badly misjudged the strategic balance of power and over-played its hand.
And in case anyone thought Wen Jiabo wasn’t reading this blog, the article quotes the Chinese premier’s response:
“Some say China has got more arrogant and tough. Some put forward the theory of China’s so-called ‘triumphalism’. My conscience is untainted despite slanders from outside,” he said.
Slander? That’s very arrogant of you, uncle Wen old sport. Evans-Pritchard then takes the Politburo to task for some delusional rhetoric:
Days earlier the State Council accused America of serial villainy. “In the US, civil and political rights of citizens are severely restricted and violated by the government. Workers’ rights are seriously violated,” it said.
“The US, with its strong military power, has pursued hegemony in the world, trampling upon the sovereignty of other countries and trespassing their human rights,” it said.
“At a time when the world is suffering a serious human rights disaster caused by the US subprime crisis-induced global financial crisis, the US government revels in accusing other countries.” And so forth.
Is the Politiburo smoking weed?
A special blend of hubris kush, one suspects.
March 18th, 2010 at 7:25 am
That article is hilarious. It doesn’t even mention one, I mean one reason why China should revalue the yuan. And AEP calls himself a “business reporter”? Amazing. Even this kind of trash can get a job in the UK as a “journalist” or “business reporter”. Apparently the democratic Britain, increasingly sounding like the authoritarian China, has no journalist standards.
The whole piece is all hot air and rhetoric. Obviously AEP knows next to nothing about China, he entirely relies on second-hand stuff that has been rehashed a thousand times to write that piece of garbage. The US will win the trade war? OK, AEP, bring it on!
March 18th, 2010 at 12:47 pm
Juche –
Obama did genuinely reach out to the Chinese (and others), only to get a slap in the face. One of the ways he did this was not to call China’s Yuan policy for the blatant manipulation that all but the criminally insane know it to be.
“OK, AEP, bring it on”
You miss the point: it’s belligerent Beijing that is spoiling for a fight. ‘Peaceful development’, anyone?
March 19th, 2010 at 4:32 am
“Obama did genuinely reach out to the Chinese (and others), only to get a slap in the face. One of the ways he did this was not to call China’s Yuan policy for the blatant manipulation that all but the criminally insane know it to be. ”
stuart, can you be more naive? Exactly how did Obama reach out to the Chinese? Simply by agreeing to visit China last year? Heck, isn’t Prez Hu supposed to visit the US some time later this year? I must say Prez Hu is also reaching out to the Americans, following your logic!
“You miss the point: it’s belligerent Beijing that is spoiling for a fight. ‘Peaceful development’, anyone?”
Beijing is spoiling for a fight? Stop smoking whatever you are smoking, stuart. It is the other way around. Who is picking a fight? Certainly not the Chinese. The stupid old fart Charles Schumer and his fellow clowns from the House of the Clowns (aka “US congress”) are. http://www.atimes.com/atimes/China_Business/LC19Cb01.html
stuart, I am no economic major I can tell you. So please enlighten me, seriously:
(1) How does revaluing the yuan help pull the US out of recession and why?
(2) How does revaluing the yuan help create jobs in the US and why? Specifically, how does that help create jobs in the manufacturing sector? Sure Chinese goods will become a tad more expensive, but still the American consumers will go to products made in Vietnam, India, Bangladesh, Mexico etc. Do you really think the Americans are patriotic enough to be willing to pay a lot more money for the same stuff (made in the USA) so that they will bring those manufacturing jobs back to the US? The old fart Schumer is too old to think it straight, you on the other hand have no excuse to not see that, stuart.
(3) How does revaluing the yuan help boost US imports to China? If you look at what the US has been importing to China (air planes, computer chips, soybeans etc.), none of those sectors will be impacted. Do you and the old fart Schumer want China to buy more crappy but expensive American goods that the Chinese don’t need while continuing to bar China from buying the stuff it actually needs (technologies etc.)?
Seriously stuart, if you know the answers to these questions please enlighten me. I really want to know.
Instead of getting consumed by that piece of garbage from AEP, check this out my friend:
http://www.atimes.com/atimes/China/LC18Ad01.html
March 19th, 2010 at 12:14 pm
“Who is picking a fight? Certainly not the Chinese”
I think you need to adjust your lens.
“I am no economic major I can tell you”
You don’t need to be. Answer the following questions:
Does China allow its currency to float freely in order that the global market should determine its value?
If no:
How does China go about ‘manipulating’ its currency?
For what reason?
What are the global consequences (you need to think outside the trade box for this one, old sport)?
If you answered ‘yes’ to the initial question you’ve been listening to too much uncle Wen in recent days. Try a different channel.
Or try this.
March 19th, 2010 at 4:53 pm
There is a natural reason to manipulate the currency, Stuart. It helps to create (or save) jobs in China, at least for now. A Chinese economist writing for Project Syndicate, Yu Yongding, basically wants America to make sure that China can continue its mercantilist program of keeping its own goods cheap (keeping the RMB flat is only one of the tools – having households keep savings in the banks at low interest rates, thus subsidizing Chinese manufacturers with cheap credits, and keeping the wages low as well to the same end are some additional ways). Obviously, Yu puts it in a somewhat different way, but that’s what he would like to see.
It’s probably fine with him if America would manage to safeguard the value of the dollar (still China’s main foreign exchange reserve) and its government bonds, and all that without making the American industries significantly more competitive. That would suit China fine, politically, too.
But then, if China insists that it has no responsibilities of its own in rebalancing the business model both them and America subscribed to decades ago, it will be useless to tell them to do better. We need to think about what we can do. After all, we can decide how big a role China should play for our economies. But even if there are business people (and editors) now who see some problems, convincing people that politics matters in business with China is usually a big homework.
March 19th, 2010 at 10:18 pm
Justrecently – thanks for that contribution.
It’s a damn complicated business that’s beyond the wisdom of any individual, for sure. And I’m fully prepared to acknowledge there are plenty of reasons (economic, political, and infantile) why China continues with a policy of undervaluation.
The main point in highlighting Evans-Pritchard’s article was to demonstrate how China is using the issue to engage in another episode of aggressive bloviating. Juche – bless him – has moved the goalposts a few inches to the left while we weren’t looking.
March 20th, 2010 at 9:19 am
stuart,
Thanks for (once again, as usual) dodging my questions and coming up with your own. Who are you to kidding to suggest that the Americans (and you Europeans too) want China to revalue the yuan simply because you don’t think it is the right thing to do? The Americans and you people wouldn’t have pressured China to do so if there was nothing in it for you. So I am simply asking you: What exactly do you gain from China revaluing the yuan? Can I get a straight answer? Cutting trade deficits? But what does China need from the US other than what it is already purchasing and those that they refuse to sell? How about the Europeans? What is that that you expect to sell to the Chinese with a strong yuan?
“aggressive bloviating” my ass, stuart. If you consider what China does ” aggressive bloviating”, what do you call what that old far Schumer does?
Justrecently,
What can you do? Of course you can shut China out as you have already been trying to do. Of course you can all start boycotting Chinese products. Hopefully that will help China get off the export-driven growth model and jumpstart domestic consumption. You think China will not survive without doing business with you people? What are you smoking?
March 20th, 2010 at 9:52 am
Alright stuart, I have read Fallows’ piece and I am still confused. Apparently you understand and agree with the often-quoted “China expert” (geez, after spending three years in China he is an expert? Doesn’t that make you a China expert too?), so I am asking you to help me understand the man:
JF: “But it also means that anything one government does to depress demand — or to shift some other nation’s demand to its own factories — has a beggar-thy-neighbor effect and slows down recovery world wide.”
Why? How did the stimulus depress demand? Doesn’t the stimulus boost demand? I mean if I had received a big fat check from the government I would go spend it, wouldn’t that boost demand? And with the money I get I could buy a British or even German-made fancy toy. How does that shift other countries’ demand to one country’s factories?
JF: “When a Chinese-made computer or motorcycle is sold for dollars in the United States, the Chinese central bank (to oversimplify) seizes part of the dollar proceeds and sends it back for investment in the United States or elsewhere, before anyone in China has a chance to spend it. It goes into Treasury notes, the US stock market, or some other dollar security. That means that it is not used to buy some foreign product (which would increase demand elsewhere), nor is it traded for RMB on a foreign currency exchange (which would raise the RMB’s value, decrease the dollar’s, and overall increase the purchasing power in a Chinese person’s hands.) ”
OK, help me out here. Even if China did revalue the yuan, as long as the above practise allegedly conducted by the Chinese central bank doesn’t stop (money goes into Treasury notes, the US stock market, or some other dollar security), how do the Chinese have more money to buy foreign products?
And lastly, it seems like the Americans and the Europeans are only bitching because China runs trade surplus with you folks. China runs trade deficit with South Korea. Should China demand South Korea to do something about the won?
March 20th, 2010 at 11:41 am
“Thanks for (once again, as usual) dodging my questions and coming up with your own.”
Ask a question related to Chinese hubris and we’ve got ourselves a ball game.
“You think China will not survive without doing business with you people?”
You people? Do I detect the spectre of deeply encoded victimhood?
China needs foreign trade and resources to continue to grow. Period.
March 20th, 2010 at 11:48 am
“I have read Fallows’ piece and I am still confused.”
He’s very accommodating to those that drop him a line. If you can’t be bothered to do that, then simply watch his space. He makes a lot of sense in a very balanced way.
March 20th, 2010 at 3:57 pm
You think China will not survive without doing business with you people? What are you smoking?
Juchechosunmanse: we had a long discussion about jobs and lives before. Your quote above should be food for thought – for yourself. You believe that I wish China death, and you still want to have discussions with you? What do you smoke?
March 21st, 2010 at 4:33 am
I think that such language as “smoking weed” is unbecoming for a newspaper of that stature. The article simply serves as a) a bit of cheeky humour and b) a peek into the author’s prejudiced mind.
My take on it here:
http://indiaschinablog.blogspot.com/2010/03/is-politiburo-smoking-weed.html
March 21st, 2010 at 7:56 am
stuart,
Clearly by “you people” I meant the west. The west proudly wears that button, what’s wrong with me calling a spade a spade?
Justrecently,
Seriously I don’t get what you are saying. I don’t think you wish China death, I just don’t think what your wish is.
March 21st, 2010 at 12:38 pm
“what’s wrong with me calling a spade a spade?”
About as much as if I were to say “you orientals are all the same”
March 21st, 2010 at 8:43 pm
# 13 Seriously I don’t get what you are saying. I don’t think you wish China death, I just don’t think what your wish is.
# 7 You think China will not survive without doing business with you people?