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China And The Global Economic Crisis

March 7th, 2009 Comments off
When Chinese Premier Wen Jiabao spoke before 3,000 legislators in the Great Hall of the People in Beijing, his words were broadcast live to a vast audience, not only in China but also throughout the globe. The most important economists, financial analysts and entrepreneurs on our planet attentively dissected everything Wen said, be it overtly expressed or subtlety placed between the lines. For it is now to China, not the United States, that the nations impacted by the Global Economic Crisis look to for salvation, and assurance that a synchronized global recession does not become an L-shaped depression of long duration.
Based on the declines in stock markets throughout the world, it appears that Premier Wen disappointed those in the West, Japan and the U.S. desperately praying that he would go far beyond the earlier promise of a 4 trillion-yuan stimulus package, equivalent to about $586 billion, to enhance domestic demand in China. Wen stuck with the 4 trillion-yuan figure, adding details as to where the stimulus package will be directed. Wen indicated that the priorities of the Chinese government would include infrastructure investment, tax reform, industrial restructuring, scientific innovation, social welfare and increasing urban and rural employment. He also indicated that the annual budget would incur a deficit of about $140 billion, equal to about 3% of China’s GDP.
Wen’s external audience had placed their bets on a significantly larger Chinese stimulus package of between $1 trillion and $1.5 trillion. However, the Chinese leadership has apparently made a far more sober and strategic calculation with respect to the Global Economic Crisis than has been the case with the political and financial elites in the United States, United Kingdom, Japan and the Eurozone. The primary concern in Beijing is maintaining social stability during a likely long economic depression, with many unpredictable and dangerous manifestations of this global disaster still in front of us. While accepting some degree of deficit spending will be necessary to modify the repercussions to China’s employment situation due to global demand destruction afflicting major components of China’s export-oriented industrial base, limits have clearly been imposed that do not compromise the nation’s long-term fiscal health.
Compare the 3% deficit forecast in China with the Obama administration’s upcoming deficit of $1.75 trillion, a staggering sum of borrowed money, equal to 12% of America’s GDP. Unlike the United States, which is the largest debtor nation in the world, China has substantial reserves of foreign currency, sovereign investments and domestic savings, enabling it to fund its deficits and stimulus spending without requiring external sources of credit. In the long term, the far more cautious and strategic approach of China towards meeting the challenge of the Global Economic Crisis will better serve her long-term national interests amid an unstable and uncertain global future.

There is another inference to draw from Premier Wen’s presentation on the economic problems confronting Beijing. While not belittling the acute and dangerous challenges that the Global Economic Crisis poses for China, the nation’s leadership seems to have taken a long view that suggests the following: by playing her cards carefully, China may be able to exploit the Global Economic Crisis in such a manner that she will emerge as the dominant economic power in the world.

With the United States reduced to literally begging China to buy her Treasuries, a vital imperative necessary to finance Washington’s stratospheric deficits, it may be that China is already positioned for global economic dominance, so long as she succeeds in maintaining her social cohesion during the difficult years that lie ahead.

 

 

For More Information on “Global Economic Forecast 2010-2015” please go to the homepage of our website, http://www.globaleconomiccrisis.com  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

China And U.S. Hold Talks Amid World Economic Crisis

December 4th, 2008 Comments off

Talks on mutual economic issues involving the United States and the Peoples Republic of China are now taking place in China amid the worsening global economic and financial crisis. The series of talks will occur over a two-day period. According to Chinese officials, the global economic crisis will dominate the discussions.

On the U.S. agenda is an attempt to resolve a dispute about the value of the yuan, the Chinese currency. These meetings are occurring under the auspices of the China-US Strategic Economic Dialogue, established in 2006 by the two major trading partners. The purpose of the dialogue is to iron out economic issues and disputes involving China and the United States. in his

Chinese Vice-Premier Wang Qishan, who is attending the meetings, the talks for China, told the Chinese and American participants that, “Making joint efforts to tackle the current global economic crisis is the most urgent task before us.”

Global Economic Crisis

November 28th, 2008 Comments off

What began as a global financial crisis has truly become a virulent global economic crisis. The credit crunch that has clogged the arteries of the world financial system has now caused an economic meltdown of global proportions. No economy, big or small, developed or undeveloped is being spread.

The danger confronting policy makers and citizens as the international community and individual sovereign nations are passing through uncharted but stormy waters. Parallels are already being drawn to the Great Depression of the 1930s. More dire, several very learned financial experts and economists have warned that what the world confronts is a mega-economic crisis that may even dwarf the Great Depression.

Recently, even China’s high growth rate has receded. It was hoped at one time that the Chinese economy could rescue the planet from a worldwide recession. scenario is no longer operative. The Eurozone, the U.K. and the U.S. are now experiencing negative growth in their GDP. A terrifying global economic crisis is about to inflict staggering pain throughout the globalized, interconnected planet.