Wednesday, December 10, 2008

Are we really depending on the Communist Party?

Here in Hong Kong I am thinking that the economies of the US, the UK and almost certainly mainland Europe are dependent on governments printing money and planning major infrastructure projects to lift them out of recession. The UK government is bankrupting the country and crucifying the currency. The US will have to wait for plans, environmental protesters and probably lawsuits before words can be translated into action. The Europeans are still arguing about the merits of the procedure. let alone the details. China, we are told, is the most efficient country at putting plans into action. Why? Because it already has cash so doesn't have the problem of finding buyers of bonds to be issued, and it is a one party state so there's nobody to disagree. The theory is fine. Will it work in practice? Thousands of workers have been and are being laid off in the Pearl River Delta, the heart of the export business, as global trade is slowing. Many more factories will close for Chinese New Year at the end of January and will tell the workers not to come back. The unemployed are already protesting. 1000 migrant workers staged a demo in Shanghai yesterday which was broken up by police, resulting in violence. How quickly can the factory workers be reemployed digging roads or building railways and will they settle for this outdoor work instead? People tell me that China must ensure 8% GDP growth to prevent social unrest. Many economists are now predicting growth of 5-6%. My observation is that political risk must be increasing in China, unless the unemployed are being swiftly reemployed as soldiers or riot police.


Anonymous Anonymous said...

As a Winchester resident, perhaps you can report back on whether your MP has had any success on improving the table service at your local coffee shops...

7:26 pm  
Blogger Welshcakes Limoncello said...

Very interesting post, WW.

10:50 pm  
Blogger kinglear said...

The really terrifying thing about China is that even if their economy continues to grow, if it isn't up there in the ooh say 8-9% bracket, there will be literally millions more unemployed month on month. That can't continue without serious implications. I know nothing about Chinese social security ( for all I know there is none) but whatever there is requires ratcheted up considerably. But I like your idea of reemploying workers as soldiers or riot police. GB tried the same thing - except they were lesbian outreach workers and social inclusivity directors - and look where that's got us. Longer term,China, India etc etc will have to provide more for their masses, and in another generation will have descended to the level where we are now.

8:40 am  
Anonymous Anonymous said...

Just been listening to the super-smug Nicola 'superwoman' [yeah, right..] Horlick trying to blame the US regulators for her fix..

She certainly made a 'right Horlick's of the due diligence on that one... and now a yank has 'Madoff' with her dosh..

But never mind, the fund is 'only down 4%' which is better than you could have done anywhere else..

Haven't these people ever heard of the Nationwide ? Or gold ? Still, good to see someone get their much deserved come-uppance..

1:35 pm  
Blogger Ellee Seymour said...

I would be interested to hear what you think will happen in the next year.

Have a wonderful Christmas. I hope to catch up with your posts again soon.

8:17 pm  
Blogger Welshcakes Limoncello said...

Buon Natale, WW!

10:14 pm  

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