Sunday, December 07, 2008

The pretense is over; China is now playing the role of a vigilant creditor. Last week at the SED in Beijing, Wang Qishan lectured Paulson that the US should "stabilize the economy." But what did he mean by that? Haven't we done enough already, recapitalizing all the major banks at the heart of the financial system? In a recent report written by Yu Yongding, a leading thinker of foreign exchange issues at CASS, he warned that the recent spade of printing money will one-day lead to the crash of the dollar. I think this was also Wang's message to Paulson and Bernanke--do not cave too much into short-term political needs to print massive amount of money. Nations of the world will one-day lose faith in the dollar. Well, the problem is that if we stopped printing money, banks and firms will go bankrupt, further decreasing our demand for Chinese goods. Is that really what China wants??

China lectures US on economy
Source: The Financial Times | Updated: 12-04-2008

The US was lectured about its economic fragilities on Thursday as senior
Chinese officials urged the administration to stabilise its economy, boost its
savings rate and protect Chinese investments.
The message went to Hank Paulson, the US Treasury secretary, in Beijing for the
strategic economic dialogue he helped launch to discuss long-term issues
between the two countries.
As expected, Mr Paulson urged Beijing not to abandon efforts to let the
renminbi appreciate, said US officials, amid fears China might want to let its
currency weaken to help local exporters weather the global slowdown.
But Mr Paulson also found himself facing calls for the US to address its own
economic problems. Wang Qishan, a vice-premier and leader of the Chinese
delegation at the two-day talks, called on the US to take swift action to
address the crisis.
"We hope the US side will take the necessary measures to stabilise the economy
and financial markets as well as guarantee the safety of China's assets and
investments in the US," he said.
The dialogue was dominated by the global crisis. Zhou Xiaochuan, governor of
the Chinese central bank, urged the US to rebalance its economy.
"Over-consumption and a high reliance on credit is the cause of the US
financial crisis," he said. "As the largest and most important economy in the
world, the US should take the initiative to adjust its policies, raise its
savings ratio appropriately and reduce its trade and fiscal deficits."
Although China also faces a rapidly slowing economy and rising unemployment,
the tone of the comments reflected an underlying shift in power.
Eswar Prasad, a senior fellow at the Brookings Institution, said: "One result
of the crisis is that the US no longer holds the high ground to lecture China
on financial or macroeconomic policies."

Hello Victor,

I have been looking for the "21 century Economics Herald" that you mention in some of your posts, but for some reason it is impossible to get a link to it on the internet. Is it only a paper publication?

Or is it the same as the 21 century business herald? I have found that one 21世纪经济报道 at www.21cbh.com, but I am not sure it is the same since I cannot find the author that you mention Wu Hongying.

I would be grateful if you can tell me how to access.

PS great blog by the way
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