Sob story in the NYT unfolds.... kindly keep your hanky-pankys ready only. Tenku tenku.
As China Rises, Economic Conflict With West Rises Too
DAVOS, SWITZERLAND — As recently as 2008, when China was still an emerging economy eager to put its best foot forward for Western consumers, it lifted censorship on several Web sites before the Beijing Olympics. At the same time, it responded to entreaties from U.S. and European politicians, allowing its currency to appreciate against the dollar.
China is no longer emerging. It has
emerged — sooner and more assertively than had been expected before the wrenching global financial crisis, which badly damaged all the established industrial powers, from the United States to Europe and Japan.
Yup. And the nyt joined the cnbc-ish mob in cheerleading PRC's harmonious rise only. Short term quarterly profits beckoned, I reckoned.
“China is the West’s greatest hope and greatest fear,” said Kristin Forbes, a former member of the White House Council of Economic Advisers and one of hundreds of top officials and executives flocking to this winter resort for the annual World Economic Forum, which is taking place Wednesday through Sunday.
“No one was quite ready for how fast China has emerged,” said Ms. Forbes, a professor at the Massachusetts Institute of Technology. “Now everyone is trying to understand what sort of China they will be dealing with.”
'no one could have foreseen it' sounds too much like the bromides and half-lies Umreeki Fed, regulators and economystics often tell themselves about the current meltdown. Truth is the inevitable was staring these worthies in the effing face all along and they were blind to it - just like they're being blind to TSPian perfidity again.
And here's exactly what I've been talking about - the challenger to the prevailing establishment consensus/conventional wisdom in very real terms:
And as developing countries everywhere look for a recipe for faster growth and greater stability than that offered by the now-tattered “Washington consensus” of open markets, floating currencies and free elections, there is growing talk about a “Beijing consensus.”
And that talk could well translate to belief and then, bhakti, who knows? Just like Marx was all talk in 1890 but soon became belief amongst this Bolshevik fringe and soon, bhakti for the second world, eh?
When the United States was snapping at the heels of the British empire, the global hegemon of the early 20th century, the situation caused plenty of friction, even though both countries spoke the same language, shared similar cultures and were liberal democracies.
China, in contrast, is a Confucian- Communist-capitalist hybrid under the umbrella of a one-party state {IOW, PRC is a fascist state. KIndly call a spade a spade, please!} that has so far resisted giving greater political freedom to a growing middle class. Now its ascendancy is about to set off what many officials and experts see as a backlash on both sides of the Pacific.{Why would there be any backlashes in prc, I wonder??}
Aah. But the business lobby will veto any tough action against PRC by the west, won't it?? Well, maybe. Maybe not.
Several foreign companies already complain that doing business in China has become more difficult. Lured until a few years ago by tax rates less than half of those applying to Chinese companies, executives now cite an increase in red tape and a growing number of “buy China” mandates from government procurement offices.
The standoff with Google has illustrated the difficulties foreign business faces in China. It has also starkly raised the question of who will have the upper hand in future negotiations.
“The operating environment is tougher than ever for Western companies,” said James McGregor, head of the government relations committee of the American Chamber of Commerce in China. “But unlike Google, most Western companies also need China more than ever.”
China is the biggest recipient of foreign direct investment in the world: 450 of the Fortune 500 companies have business presences there, and many of those still reeling at home are doing brisk business in China. “G.M. is hurting anywhere else, but here things are quite profitable,” Mr. McGregor said.
Business interests in China could make it harder for Western politicians to lash out. “It’s a situation the U.S. was in for a long time,” said Ms. Forbes, the M.I.T. professor. “Many people didn’t like U.S. policy, but you had to be in the U.S. market.”
If business executives are looking to China for its low manufacturing costs and sizable market, political leaders are studying a state perceived to have found a recipe for lifting millions out of poverty with fast growth, even if that means a stiff measure of domestic repression. “You hear more and more people talking about a Beijing consensus,” Ms. Forbes said.
And so it is set, the 'Beijing consensus' is then upon us. Hello, brave new world.
But what exactly is the Beijing consensus? Some see it as a form of economic management with greater government involvement that is on the rise across the world. Others interpret it to mean more strictly controlled capital markets, which have made a re-appearance even in previously open countries like Brazil. Policy makers in Malaysia and Dubai focus on replicating China’s special economic zones, which afford generous terms to foreign investors in manageable geographic areas.
Some suggest that China’s lack of democracy is an advantage in making unpopular but necessary changes. “It is more challenging for democratic systems because every day they come under public pressure and every short period they have to go back to the polls,” said Victor Chu, chairman of First Eastern Investment Group in Hong Kong, the largest direct investment firm in China. “China is lucky to have the ability to make long-term strategic decisions and then execute them clinically.”
And no, its not like asset bubble pops will undercut the PRC rise story, seems like...
Kenneth Rogoff, an economics professor at Harvard University who just spent two weeks in China, warns that the country will face its share of economic troubles in the years ahead. But that will not change the underlying trend, he said.
...
According to Mr. Rogoff, over the next four decades or so, the Chinese renminbi will gradually come to rival the dollar as the world’s leading reserve currency, making China’s response to its increasingly central role in the global economy critical.
The risk, Mr. Shambaugh of George Washington University said, is that “the world will be asking more and more of China but getting less and less in return.”{As if it isn't already}
A tad premature to celebrate the end of the dominant Western era perhaps but I can see that sunset happening in my lifetime, if I'm lucky. Nothing like a kick up the musharrafs of every neta and babu in what we call the 'free world' (yup that includes Yindia too) and PRC represents that kick in all its nastiness to shake things up a bit, eh?