Right-Wing Tabloid says Communist not Communist enough – Need to learn to share

Item republished in the UK Daily Telegraph.

It seems that it is the communists fault. If only they would share more and saved so much money. Premier Wen Jiabao needs to be more caring.

From Edward Hadas at Breakingviews.com

Chinese premier Wen needs to think of the greater global good
Wen Jiabao, the Chinese Prime Minster, has told the Financial Times that “it is completely confusing right and wrong” to blame generous lenders for the problems of reckless borrowers.

He is talking about countries not consumers, and his logic puts China on the moral high ground. His stance is unhelpful.
The comments were a riposte to the charge that China should share some of the blame for the financial crisis, having used too much its vast trade surplus – 6pc of GDP in 2008 and the source of $2 trillion in foreign currency reserves – to buy US government debt.
Those accusing China of bad practice, a group which includes new US Treasury Secretary Tim Geithner, say those funds provided the fuel for the credit boom, now turned bust. China has lent foolishly, they say, and should be punished.
Wen has quite a different understanding of good and bad behaviour. In the interview, he compares profligate borrowers, mainly the US, with Zhu Ba Jie, a fallen deity who is part-human and part-pig. The character in the Chinese epic tale Journey to the West is famously gluttonous and refuses to take good advice.
From a purely Chinese perspective, it’s hard to argue with Wen. A consistently cheap renminbi helped create hundreds of millions of jobs, spread skills and virtually eliminate poverty. The government even let the currency rise by 20pc over three years, only stopping the steady revaluation when the crisis hit in 2008.
But maintaining this China-first attitude will make it harder to find a resolution to the financial mess. However the fault is apportioned, everyone is now involved.
China has much to contribute to a solution which will also be to its own benefit: a commitment to move steadily to eliminate the trade surplus, a promise not to dump dollars on the market and an agreement not to take desperate measures to stop the domestic growth rate from falling.
People and nations can be persuaded to sacrifice short-term self-interest for the greater good. Indeed, industrial prosperity and global trade depend on the widespread willingness to share pains and limit gains. Wen – and his counterparts around the world – should keep their eyes on the greater good.

It looks like no matter what China does it cannot win. Please look at Premier Wen’s Davos speech, he outlines what China is doing but he also said China could not rescue the World alone.

For better article please see China Hand and read – China to Obama:

    “Nice T-Bill Auction Ya Got There…Hate to See Anything Happen to It”
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Hope for Success for Australia – 求成澳大利亚

求成澳大利亚

 

 

Premier Wen Jiabao, hope for Australia

Premier Wen Jiabao, hope for Australia

 

 

In Jan 2009, the CIA World book listed estimated growth rates for 2008 for the following regions.

China, 9.8%, (GDP PPP – USD$ 7 800 Billion)
South Korea, 4.3%, (GDP PPP – USD$ 1 312 Billion)
Australia, 2.5%, (GDP PPP – USD$ 825 Billion)
European Union, 1.5%, (GDP PPP – USD$ 14 960 Billion)
USA, 1.4%, (GDP PPP – USD$ 14 580 Billion)
United Kingdom, 1.1%, (GDP PPP – USD$ 2 281 Billion)
Japan, 0.7%, (GDP PPP – USD$ 4 487 Billion)

On Wednesday 28 January 2009, Premier Wen Jiabao delivers the speech that anybody with brains was waiting for. Premier Wen is not a failed businessman, he is not a lawyer or an actor by training. Premier Wen is a bureaucrat whose primary training was as a geologist. Premier Wen announces that China has been set the goal of 8% growth in GDP in 2009 and although this growth target would be difficult, it was achievable. A matrix of policies would be used to reach this target. The stand out feature was that the Chinese government was going spend the equivalent of 16% of the 2007 GDP or 4 TRILLION yuan over two years.

Thanks to the magic of Google (to achieve ball park estimates.)
4 Trillion Yuan is about USD$ 585 billion or AUD$ 878 Billion. It is of the same order as the amount of money the USA burnt in Iraq from Mar 2003 to Aug 2008.

If Australia was doing something similar and scale it to Australian terms, the Australian Government would allocating USD$130 billion or AUD $195 billion over 2 years at the problem.

When China (I am an optimist) achieves its goal, it is going to add USD $625 billion to their economy, or the equivalent of three quarters of the total of the Australian economy to the Chinese economy or one Saudi Arabia equivalent.

The good news for Australia is that a lot of crumbs will fall off the table. If you live in a resource state, it is possible that that you might even miss the recession.

I still find it mind-blowing that no Australian media outlet picked up on this three days later.

I apologise to all Chinese people that our Prime Kevin Rudd 陆克文 was not there at Davos to given Premier Wen a standing ovation at the end of his speech.

8% – Why Premier Wen Jiabao 温家宝 is my hero

Best New Years News

Premier Wen Jiabao

Premier Wen Jiabao

The best economic news this month has been from Premier Wen Jiabao 温家宝 .In his speech that Premier Wen gave at Davos yesterday 28 Jan 2009, Premier Wen annouced that China’s goal is 8% growth for 2009, he did qualify it by saying it would be difficult but it was achievable. Importantly his strategy is not just based on hoping Walmart will buy stuff but a lot of money will be thrown at improving infrastructure and health for all Chinese people.

Premier Wen is talking about spending 16% of  Chinas 2007 GDP in infrastructure developement. If Prime Minister Rud was to commit to the same thing then in Australia we would be throwing some of the order of  AUD $195 Billion dollars at our infrastructure.

If there is hope for the Australian economy, this is it.

I can’t believe the Australian, the Fairfax press, or the Australian Broadcasting Corporation have not made this one of their major headlines. Do any of these main stream media outlets believe that we will come out the recession by selling houses to each other.