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Super China

Robert Peston | 06:25 UK time, Thursday, 5 March 2009

Much of what the Chinese premier, Wen Jiabao, described this morning to the 11th National People's Congress as his country's programme to combat the evils of global recession would have sounded very familiar to a European or American audience.

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What have become the new orthodox policy prescriptions for this time of crisis were all there: tax cuts; big increases in public spending; massive jumps in public-sector borrowing; more lending to business; anti-protectionist rhetoric; calls for improved regulation of banking and financial services.

It could almost have been Gordon Brown addressing the 3000 members of the National People's Congress in the Great Hall of the People under the giant red star.

Except for one glaring and important difference.

The Chinese economy remains - by the standards of the US or the UK - exceptionally strong.

It's true, as I've been pointing out over the past few days, that growth in China has been slowing down - and regions particularly dependent on exports, especially the south, have suffered mass closures of factories and painful rises in unemployment.

But many economists believe that the Chinese economy is still growing, even if they also say that the official statistics overstate that growth.

Thus Stephen Green at Standard Chartered reckons there was 1% growth between the third and fourth quarters of last year, and that there'll be a similar expansion in the first three months of this year.

For 2009 as a whole, he's forecasting GDP growth of between 6 and 7% - which is only a little less than China's official forecast of 8% (which Wen Jiabao repeated today).

That may be a long way from the low teens growth of last year. But it looks pretty amazing compared with the very painful recessions in Japan, the UK, Germany and the US.

And here's another frightening comparison between China on the one hand and the UK and US on the other.

Robert PestonWen Jiabao announced that China's budget deficit this year will be 950bn yuan. That sounds like a big number - and it is an all-time record for China.

But, in relative terms, it's a flea bite compared with public-sector borrowing in the UK.

Converted to sterling, that 950bn yuan is equivalent to roughly £100bn.

Which is almost 20% less than what the UK government expects to borrow in 2009/10.

When those numbers are expressed as a percentage of GDP, there's an even starker picture of Chinese prudence versus what many would describe as British profligacy.

China's deficit is less than 3% of GDP, compared with 8% in the UK.

And, of course, the US public sector is arguably mortgaged up to an even higher hilt than Britain's.

When you add in the near-crippling indebtedness of businesses, banks and consumers in the UK and the US, well at that point China's financial strength looks almost awesome.

Also, as I've been emphasising, China's giant state-controlled banks have been much more cautiously managed than our commercial banks - and have neither the capital or funding constraints of ours.

None of which is to retreat from what I've been highlighting, which is that China faces formidable problems - in particular the challenge of maintaining social stability at a time when wages are being squeezed and millions are losing their jobs.

It's just that - in a way - we'd be fortunate to have their economic problems (if not their social ones).

So what are the big messages I took away from Wen Jiabao's two-hour address (perhaps we should, at the least, be grateful that Gordon Brown shows no sign of adopting Chinese speechmaking habits)?

Well he said some very striking things about allowing inefficient businesses to fail, about reducing the country's reliance on low-cost manufacturing of the basics, and about wanting to stimulate consumer spending.

All of that is both a threat and an opportunity for developed economies like ours.

There should be scope to increase our exports to China. But the competitive threat to the companies of developed economies will - if anything - intensify.

And over time (but it will take years) China's massive financial surplus - which was in part responsible for the glut of cheap money in the US and UK that fed our dangerous addiction to debt - should diminish.

For what it's worth, however, every Chinese person I've met over the past few days - from the lowliest factory work up to the Chinese Commerce Minister, Chen Deming - lays the blame for the global economic crisis on crazy risk-taking by American banks (Britain's aren't famous enough to register with them) and excessive borrowing in the US.

In that context, here's my favourite quote from my interview with Chen Deming, which pokes gentle fun at those who say China was at fault for saving too much and then lending that surplus to spend-spend-spend consumers in the west:

"Personally I can't agree with some people on their point that they [US households and businesses] borrow money from others, they overly spend this money and they make trouble for the rest of the world, but finally they blame those who lend them money for making these troubles. According to Chinese philosophy this kind of accusation is totally ridiculous and unreasonable."

I suspect that many of you would agree with China's equivalent of Peter Mandelson.

That said, China's leaders recognise that the country's prosperity is wholly dependent on ours.

So even if they believe that our mess is our own fault, they see that they have a powerful interest in helping us to clear it up.

In that context, it was striking that Chen Deming strongly disagreed with me when I described China as an economic superpower, perhaps because of a fear that as such China would have to take on the heavy burden of new responsibilities to the global community.

By contrast, today's rhetoric from Wen Jiabao's was all about a more open, outward looking China.

Wen Jiabao's China seems to want to play an important role in making the global economy safe for all of us - and is not revelling in our economic humiliation.

Comments

Page 1 of 3

  • Comment number 1.

    "It's just that - in a way - we'd be fortunate to have their economic problems (if not their social ones)."

    Aren't social problems the ones that matter most in the end? I have relationships with people, not Bonds or stock options.

  • Comment number 2.

    From your post yesterday

    A salary of £4 ($5.60) a day is not untypical, even for a position requiring some skills

    Worth remembering when we talk about the size of the Chinese economy. So what would be the national debt in China be related to per capita income compared to ours.

  • Comment number 3.

    "It could almost have been Gordon Brown addressing the 3000 members of the National People's Congress in the Great Hall of the People under the giant red star."

    The analogy is a good one RP:
    Unelected leader, one party state; expect Gord would feel right at home, instead of looking uncomfortable on his ego trip to the "land of the free".

    At least the Chinese communist bankers didn't get suckered into buying a load of AAA rated toxic stuff and stuck with the US Govt Bonds. Greed and wisdom don't mix.

  • Comment number 4.

    ........."but finally they blame those who lend them money for making these troubles...."

    Wise words, why cant the western politicians learn from this wisdom........... sure the banks made mistakes and GB stoked the housing bubble , but in the end nobody was forced to max the credit cards or take out a second mortgage to buy a 4x4 or a holiday in Florida..... Thos who were prudent (and gordon brown certainly was not) are now suffering and being punished for the folly of the greedy.

  • Comment number 5.

    So what you are saying is that the world is going to have to work hard to 'work' our way out of this mess. (pay for it)?

    More regulation of the Banking system will only mean banks employ more wily skilled lawyers and academics to 'worm' their way around the regulations and trade the way they can make a buck without regulation.

    Human nature being what it is, man will always find a way to fiddle the system

    It was after all the fiddles that brought the system crashing down, not just the label 'corporate debt' or 'devaluation of assets' or 'sub-prime'.

    We need the Governments to stop protecting the fraudsters and punish them and let's start again, with a clean sheet.

    Markets will only then regain the confidence needed to trade soundly.

  • Comment number 6.

    What did they say when you asked them about the way they manipulate their currency, subsidise exporters etc?

    You did ask didn't you?

  • Comment number 7.

    Wow, Robert, you are in China! Presumably you are still in beijing?

    On first thought, I would ask you if you can spare 10 minutes so we can have a cuppa together, weather here is exceptionally good today (even by London's standard - I spent last 11 years there), should be lovely for an outdoor drink.

    Then I thought, even if you have 10 minutes to spare, you should have more important use of it. China, especially Beijing, have changed so much over these years. It is well worth your time to closely watch this city. In a few years' time, this could become very influential world-class financial hub. Watch this city, watch this country. We used to say, China has lots of potential. Now I am a true believer.

    --from a Beijing-born British who spent last 11 years in London's Square Mile, and now working in the Chinese financial industry.

  • Comment number 8.

    No.5 costmeabob

    Good point about fraudsters masquerading as smart bankers.

    What's been happening is no different in principle from the old wine maker's trick.

    Take the cheapest plonk (cash strapped consumer borrowers), water it down with anti-freeze (totally broke consumer borrowers), put it in a bottle stamped with a "real Champaigne" label (AIG CDS wrap), sell it in all the well known stores (Lehman's, Merril,s RBS etc), borrow to expand the business cause its doing so well (from China).

    Then totally capitulate when the fraud does not work.

    The Chinese must think we are a right bunch of idiots.....

  • Comment number 9.

    #5 "We need the Governments to stop protecting the fraudsters and punish them and let's start again, with a clean sheet."

    You mean, a bit like China, where such "economic saboteurs" are taken out to a public square and shot ??

    I wonder how many of our esteemed bankers will vote *FOR* just such a scheme ??

  • Comment number 10.

    There is an old Chinese proverb - No one who can rise before dawn three hundred and sixty days a year fails to make his family rich. This comes from a heritage of intensively farming rice paddies – perhaps the most skilled and difficult form of agriculture on this planet. Perhaps it is true that hard work and a return to the old values is the solution. US Treasury Secretary Tim Geithner blamed currency manipulation by China for the high US trade deficits and so Chinese Premier Wen Jiabao responded by blaming the inappropriate macro-economic policies of some economies and their unsustainable model of development. In other words, the low saving/high consumption US economy. But blame is a distraction and not the solution. A different perspective is required. There is a blog that helps people develop a positive mindset towards the current economic challenges. The Survivors Guide To The Credit Crunch is at [Unsuitable/Broken URL removed by Moderator]

  • Comment number 11.

    Unless China can be convinced to run a 10% budget deficit for the next three years then their economy will implode like the rest of ours.
    China must be convinced that this is the only way foreward, and they need to move now, in five/six months time they will have missed the boat.

  • Comment number 12.

    Human rights may interest West's politicians but Robert gives us a glimpse of the true problems of China - majority in poverty even when working and the paucity of personal public services for the vast majority of its population.

    The Chinese communist party has converted itself to the chinese capitalist party without any alternative for the average worker.

  • Comment number 13.

    Chen Deming is absolutely correct - personal responsibility - nobody forced anyone to overborrow (including the government). We have reaped what we have sown.

    As for the comment about swamping the world with too much cheap money, does that not strike you as exactly what the authorities are doing now in an attempt to mask the recession. We will reap what we sow again in a couple of years time namely rampant inflation and high interest rates.

  • Comment number 14.

    A significant part of the boom in the USA and Britain was caused by those countries "selling" their manufacturing jobs to China. We exported our jobs.

    Now:
    (i) China is facing a fall in its exports to the West;
    (ii) The Chinese government will use its reserves to generate an internal market for its manufacturing base;
    (iii) Chinese designers and engineers will develop their own products, rather than just sub-contracting for the West;
    (iv) China will then sell its own products to the West, and compete against us using their relatively low wages.

    This will take a few years to come to fruition, but it will come to pass.

    China will not simply sit around and wait for its export markets to recover.


  • Comment number 15.

    I am from HK, parents are japanese chinese and been living in UK for more than 20 years. So I am a bit of mixture of HK, Japan and UK.

    First thing what we learn before we can read and write is to always save money for the rainy day. We learn that from school, social pressure, and especially strong from family. It's like a religion to us, one of the symbols of being chinese. Also, we don't want to waste time blaming the government, blame yourself - get up and do something about it.

    It is quite common in china that people go to far away city and work very long hours, and leave their children to their parents to look after. They send all their earnings to their parents and they only gather with their kids few weeks a year.

    Problem is that this society is too liberal, social welfare is too abundant, union is way too spoil, administration is too much, people sitting down blaming everything too much, too many deadlocks.

    China has a lot of its own problems but in terms of sorting economy crisis, in my view it is a lot easier and quicker to sort out the mess. Because the government has a lot more power to do so. Unlike here, how much time spent on arguing the banker pension. In china, they are put in jail already.

  • Comment number 16.

    Wonderful and well laid article by Robert.

    China has always been prudent compared to rash financial dealings by USA and UK.

    However, if USA were to pull back all manufacturing from China, then China would not have an economy to buoy them up.

    Manufacturing is the key - not banking and insurance - eventhough the last two are also important.

    Margaret Thatcher killed manufacturing in UK; Gordon Brown suffocates us with indescriminate borrowing during his years as Chancellor and presently as PM and Chancellor - dual post he holds/

  • Comment number 17.

    The Chinese have much to be blamed for regarding the current global woes. Their philosophy regarding lending to the West is hypocricy written in cheapest tinsel ink.

    How about some critical and nasty analysis of China's economic wrongdoing towards the rest of the world ? How about asking the Chinese hobnobs some really awkward questions ?

    Please Mr Peston stop soft pedalling.

    Or do you fear what happened to the young Economist , Dmitrijs Smirnovs, in Latvia, when he decided to publish analysis of that countries 26 banks ? Arrest by the Latvian Police ! And a spell in jail.

  • Comment number 18.

    Bloomin Heck Robert,

    When the cat's away the mice will play.

    With you and Gordon on your jollies!The Bank of England is about to go to print!

    The BBC are not tackling it at all.

    Perhaps you could take a distant view and advise;

    1 What size of leak are they hoping to plug?

    2 How much should they print?

    3 Why does the money have to go out to HSBS/lloyds/ et al .... Bankers we no longer trust?

    4 Could the BoE ringfence the money and help those most in need?

    5 Given the global nature of the economy will the effects of printing be limited to the UK, or will the poorest in the world end up with our problems?

    6 Who, in the Labour party is fit to deal with the potential fallout, Bearing in mind the fiasco over sussing out bankers benefits?

  • Comment number 19.

    Report this morning on the web,

    Somali Pirate has been badgering the Balmoral cruise liner!

    Hopefully, Somali pirate will return from his travels safely.

  • Comment number 20.

    Robert,
    You're comparing apples and pears. You are comparing a loosening command economy with socialised free markets. I accept we could learn a lot from China on prudence. When they open their home market and drop their controls, they might find they'll have some debt problems of their own!See my post yesterday.

  • Comment number 21.

    Robert,

    I can't help thinking that you are comparing apples with oranges

    You can gone to China with a western economists views. Does China actually work within the parameters that you understand?

    If their economy is adaptable, and able to soak up the unemployed by putting them back on the land, are you saying that we should copy this model here?

    Even Mandy's latest mutterings were blocked with "404" errors on the bbc yesterday. I fear the agenda has changed

  • Comment number 22.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 23.

    Sooner or later China will other more productive things to do with its money than to lend it, however indierctly, to sub-prime westerners who have no hope of repaying. If our existing debt is paid back in dollars/pounds made worthless by inflation then the chinese may not lend us much more. If the money supply from China drys up then we will face the biggest changes to our way of life.

    You're all doing very well !!

  • Comment number 24.

    The picture came to my mind that the west, who did their best to cause the fall of the Chinese Empire with the opium trade, and now the west is falling due to their own self created addiction to money which the Chinese have so kindly given them the opportunity to borrow.

    It is very interesting knowing that history repeats itself in strange ways which are not visible until the game gets going in the wrong direction.

    No one can blame the Chinese for giving the credit as those who produce goods have the goal of selling those goods, and if you can buy them on credit why not--but you must pay at some time or another.

  • Comment number 25.

    Amazing to read this item while simultaneously listening to the quantum physics discussion on In Our Time on Radio 4.

    It makes me wonder if the idea of anyone causing the financial crisis is meaningful. Perhaps all we can say is that the crisis is consistent with what went before - after all borrowing doesn't cause lending or vice versa, they both just enter into a deal.

    Here's an idea on whether we can "blame" someone for this:
    http://www.knowingandmaking.com/2009/03/causality-or-consistency-of-boundary.html

  • Comment number 26.

    There is a lot of Chinese government spin in this post today and it rather sounds like the similar bluster you hear from politicians in the UK and the US. Let us just examine what Wen Jiabao actually said instead of the spin headlines. First he projected a increase in the budget deficit to Rmb950bn, however he did not announce any increase in the Rmb4,000bn ($585bn) stimulus package announced earlier. That Rmb4,000b in itself was a bit smoke and mirrors because it included a number of initiatives announced before the credit crunch.

    8 percent growth is of course in line with the world bank estimates which they produced in a quite lengthy document. Well worth reading and if you input the actual reported figures from January into the report you come out with a very different growth figure (much lower). Reported growth will be 8 percent regardless rather like inflation rates in the UK are not biased with a basket of goods which does represent the average person (not all of us spend 20 percent of our income on shoes and clothes). The numbers just plain do not add up and 1 percent growth in the last quarter seems more likely, but the 6 or 7 percent growth rather relies on stimulus packages in the US working which I don't think is realistic. We need to remember that Standard Chartered would have good reason to talk up Chinese prospects and have done well by picking up were other western banks have pulled away. What most people forget when they quote these gorwth figures is that the population of China is continuing to grow while western populations are shrinking.

    Chinese government deficits run at less than 3 percent which is not as good as Australia which runs at about 0 percent. If we add in pension liabilities, new bank liabilities as western governments are being forced to do, then Labours claim of a 40 percent deficit looks a bit shy of the 3 digit number that it ought to be. The main difference is that China does not really do government bonds or Gilts, which really limits their ability to create a stimulus package (hence the smoke and mirrors perhaps), but means they don't overload their children with debt. Neither China nor the west has the right balance in my opinion.

    Claiming that China's giant state-controlled banks have been much more cautiously managed is probably a bit of stretching of the truth. Since 2003 the Chinese government has bailed out the following major banks Bank of China, China Construction Bank, and Industrial and Commercial Bank of China and at the end of 2007 spent even larger amounts bailing out the agriculture bank of china. China has seen a big commercial real estate and housing market crash. During September of last year analysts at fitch ratings said banks had used an underground market on a large scale (estimated at 1.5 trillion by fitch) to stoke up lending. "These types of credit and/or institutions fall outside the traditional structures of financial supervision, exposing banks to a growing amount of risk that is for the most part hidden By getting a portion of their credit off books, Chinese banks are able to comply with official loan quotas while in practice exceeding them,". Even without such off-books liabilities, the banks are facing a crunch as the economy slows hard and the property market stalls. Shenzen house prices are already down 30pc. Morgan Stanley and socGen have all warned within the last six months that chinas housing market is deteriorating rapidly and chinese banks will be facing diffcult times.

    When Wen says they will allow inefficient businesses to fail, and they will reduce china's reliance on low-cost manufacturing of the basics we should perhaps take heart that at least one politician is starting to look at the fundamental imbalances rather than trying to just ignite the economy with all the old imbalances in place. Despite being somewhat economical with the facts in my view the Chinese government does appear to be leading the way and taking future debt seriously.

  • Comment number 27.

    New World Order

    Those who produce enough food for their own use.
    Those who produce enough energy for their own use.
    Those who can "control" their population with low wages and living standards.
    Those who can "take" what they what from other nations.

    Work it out where we stand!

  • Comment number 28.

    Quote:
    "In that context, it was striking that Chen Deming strongly disagreed with me when I described China as an economic superpower, perhaps because of a fear that as such China would have to take on the heavy burden of new responsibilities to the global community."


    And so China can quietly and slowly buy up the Western Countries' resources and industries, and take ownership of our economies, without the populations realising it (they have to do something with the cash mountain they are sitting on).

    And when, after doing so ever so quietly for some time, we finally realise that China is an economic superpower enslaving us (as we have enslaved them in the past !!), then it will be too late, and our children and grandchildren will be servants (and slaves - given Chinese world-philosophy) to the Chinese rich for decades to come.


    Some will say there is justice in this slavery. I prefer my children to be equal, and not shackled in debt, as they will be.

  • Comment number 29.

    It would be useful to provide an explanation about how China's currency remained so weak over the past few years despite a huge current account surplus?
    It is simply not as black and white as saying that western economies borowed too much, sustained by the prudence of the Chinese.
    The only way that western economies could have tackled this in the past would have been by protectionist policies, it could be argued that China has effectively undertaken protectionism for the past few years and is at the root of the current problems the global economy faces.
    The big policy mistake of the past few years was engaging with China before it had undertaken the necessary social and political reforms.

  • Comment number 30.

    #11 "Unless China can be convinced to run a 10% budget deficit for the next three years then their economy will implode like the rest of ours."

    If China has a budget deficit, it will start dumping its stockpile of Western debt in the open market. The result will be a large devaluation of the US$ and the quid and, maybe, the Euro !! But their economy will not implode.

    Quite unlike Britain whose, then, Chancellor had sold the family silver (or gold) to pay for frivolous reasons and, now, have nothing of value left to sell !!

    As stated in Robert's article above, the Chinese face quite a different set of problems from that of the West. Implying that they have the same problems as the West is to misunderstand the situation.

  • Comment number 31.

    China should have a word with prudence Brown, he's got the answers for everyone's problems

    I see his latest solution for our soon to be £120 billion budget deficit is simply to print the money to pay for it

    PS be interested to hear your views on this 'nuclear option' Robert

  • Comment number 32.

    15 Don Kuan

    One of the first things I was taught was that freedom and democracy are basic human rights.

    I understand that statistically people of Chinese origns are over represented in Casinos in the UK, not much saving for a rainy day there then!

  • Comment number 33.

    15,

    Its all very well saving for a rainy day (that’s very commendable and prudent thing to do), what is going to happen to those savings once the printing presses role?

    How prudent have you been then?

    Just asking, as I don’t think you see the BIG picture.

  • Comment number 34.

    Sorry - this is not about China (where is the blog on QE?) but somehow, for some reason, GB (who I have nothing against personally but is the LEADER of OUR country) is not being asked the right questions nor is he providing any clear well thought through answers.

    It sounds like later today we will have moved from being the country best placed to tackle a down turn to a position where we are only the second country in the world to try Quantitative Easing and the conclusion after Japan's 10 year try out was not conclusive (if that makes sense).

    Personally it is way too complex for me to get my head round but it sounds major and it sounds like it could have some very serious consequences.

    How is it that people on this blog have seen this coming for months and there has been no real public debate - I just feel there is a lack of real communication of STRATEGY, POLICY, DIRECTION and THOUGHT PROCESS.

    The speed of this turn around in political announcements (from 'best placed' to 'QE required' is frightening.

    China - for all its importance - seems to be only one small factor in our tailspin to oblivion on the world stage.

  • Comment number 35.

    #17 "The Chinese have much to be blamed for regarding the current global woes. Their philosophy regarding lending to the West is hypocricy written in cheapest tinsel ink."

    Oh yes, they sent the PLA to put a gun to your head and forced you to buy their computers, TV, DVD players, etc. !! And since you had no money, you borrowed way past your eyeballs to pay for them !!

    "How about some critical and nasty analysis of China's economic wrongdoing towards the rest of the world ? How about asking the Chinese hobnobs some really awkward questions ?"

    How true !! They should have *NOT* accepted any foreigners debts and insist that they pay cash only for the goods they buy. And they mustn't lend anymore money to the West especially to the British otherwise they will be tempted, once again, to spend it all on tatty rubbish !!

    "Please Mr Peston stop soft pedalling."

    You are there to do a propaganda piece, not to draw a picture as you see it !! Why let the truth get in the way of a good propaganda piece ??

  • Comment number 36.

    #15 Don Kuan

    Excellent post, refreshing insight!

    "It is quite common in china that people go to far away city and work very long hours, and leave their children to their parents to look after. They send all their earnings to their parents and they only gather with their kids few weeks a year."

    I shall enjoy telling my 5 children what they should do with their earnings!! ;-)

  • Comment number 37.

    I agree with the general message of this article. The Chinese definition of a recession is when economic growth is not in double-digits. A growth forecast of 8% is still massive!

    I also have contempt for people who criticize the chinese for saving too much. They don't seem to understand that just because I save today, does not mean I will not spend tomorrow. In fact, it is because of times like these that I can buy food when I need it and I can still support my wife and children. If I still have money leftover when I die, I simply leave them to my children to spend. So in Gordon Brown's very own words, economic growth is not cancelled, it's just been put on hold.

  • Comment number 38.

    #21 Looking into the Big Brother's Guide to Double-speak, the 404 message means - Go away, peasant. Why are you looking something that do not concern you ??

  • Comment number 39.

    In that context, it was striking that Chen Deming strongly disagreed with me when I described China as an economic superpower, perhaps because of a fear that as such China would have to take on the heavy burden of new responsibilities to the global community.


    It could be a good reason, or the outlook is on the skin basis rather than unmask a deeper one. And I just suppose that Chinese government, underneath, knows what their present power can create. Tough time as China's encountering, it does deserve praises by the threatening statistics
    of deficit compared with some "giants'". China seems to sit on the safe boat, do all the basics, waiting for her recovery without even seeming to exert herself while western parts are still suffering worsened climate of which deadlock many pessimists are not expecting to break in the periods of two or three years.


    Quite sarcastically heh, I suppose whether some westerners begin to admire China, and can't help thinking that it's a good opportunity where another giant stands up.
    But it is a truth that China is secretly preparing every moment on purpose as #14 has mentioned. The budget now Mr Wen declared is a case in point. China's internal regulation is truly severe, and strive for being stronger in economy creates ithe real potential. On the other hand, the truth CHina now can't evade is that the burden it shares with not only graduates and workers but also high school students is exceptionally considerable despite the fact that the global economic recession even strengthens it.


    Hopefully, it is just a lesson to teach where both sides can learn. It's more than humiliation but the alarm.

  • Comment number 40.

    "Thus Stephen Green at Standard Chartered" - eh? Robert, this news of Mr Green moving from HSBC has passed me by I'm afraid.

  • Comment number 41.

    Moderation queue one hour.


    Have they gone to China?

  • Comment number 42.

    #6 "What did they say when you asked them about the way they manipulate their currency, subsidise exporters etc?"

    They probably said this - http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/

    Just a little quantitative easing and encouragement to preserve local jobs !! Chinese jobs for Chinese people !! Move along now, nothing to see here !!

    Doesn't all this sound awfully familiar ??

  • Comment number 43.

    Chinese steel prices fell heavily a couple of weeks ago as they appear to have been over-producing. Their forecast for steel production is still bullish. Where will the steel go? Certainly not for export. Crucial to Bulk Shipping is the ferric content of their domestically produced ore which seems to be falling, and therefore import requirements for iron ore should rise. Is the State inclined to subidise domestic ore to make up for it's poor quality? BDI dependent on the answer !

  • Comment number 44.

    What is it with BBC's infatuation with China? First, you have this guy Mr. James Reynold in there and now Mr. Robert Peston in there too. Who's next? What did China do to BBC to deserve such an honor?
    Mr. Peston, I must say, so far your blog on China is much more objective than the other guy. Thanks.

  • Comment number 45.

    I recall reading in the FT a few months back that the Chinese govt looked at CDSs, mortgage backed derivatives etc back in 2000ish and told their banks they couldn't use them as collateral. The way they described them was a mirror image in a mirror image that appears to go on for ever!!!

    One of the benefits of a one party state that has a fair chance of still being in power when the bubble bursts.

    Reminds me of Gordo having a little chuckle at a quip about there being two types of Chancellor, those that are successful and those that stay on too long.....well it seems he let his ego get the better of him and he's in the hot seat now the bubble's well and truly burst.

  • Comment number 46.

    #3

    There's always plenty of posts on this board that are critical of Brown - and sometimes with good reason.

    However - the 'undemocratic' argument is misleading and inaccurate.

    Labour are in power due to a free election in 2005.

    At that time it was made very clear by Blair that he wouldn't serve a full term - and it was obvious that Brown would be his successor.

    So the British people had a clear choice of what government they wanted in power until 2010.

    Unlike the Chinese . . .

  • Comment number 47.

    Peston.

    I said a tie man, a tie !

    How long do you think you would last on the trading floor with that attire ?

  • Comment number 48.

    It seems we are about to embark on a plan that most posters see has many flaws - the main one being that we push more money to the banks to encourage spending but they do not want to lend and we do not want to borrow.

    But you can imagine the discussion deep in the hearts of Downing Street.

    'So we can't put interest rates any lower - what should we do now?'

    'We could give this Quantitative Easing a go?'

    'What's that?'

    'Don't really know but it might help.'

    'I think Japan tried it but it didn't really work - is there anything else we can do?'

    'Can't think of anything.'

    'Okay lets give that a whirl - get the soundbites ready for Gordon and Mandy.'

    As walk out of room side conversation.

    'Wonder if there are any downsides to this Quantitative Easing?'

  • Comment number 49.

    But China boasts 16 of the world's 20 most polluted cities and, now that jobs are being lost, there is no social security system - so shouldn't the "wise" Chinese have tended to their own people's welfare (they are Communists after all!) instead of lending their surplus to greed crazed Western bankers. And an environmental clean up could have boosted trade with the West.

  • Comment number 50.

    Its very true to say that BG and the labour party HAVE caused massive damage to the UK and its standing in the world however, consider this!

    Just imagine what will happen when Deadly Dave gets into power, first thing is the lever on Interest rates will get pulled all the way back. I have a question for you all,

    You seem to think its bad that GB’s borrowing and subsequent loading of that debt onto one’s children is a bad thing, what effect will the tory policy have on your kids?

    Homelessness?

    Joblessness?

    Will they even need to worry about it at all?

    You ALL need to get real about what the effects of tory policy will be, personally I’ve worked hard all my life and the thought of having to work harder to pay more INTEREST so Britain can be a ‘world power’ again fills me with the will to pack it all in !!!

    What a dump we live in!

  • Comment number 51.

    It is not so long ago that Chinese banks had up to 40% in non-performing loans and shortly before they floated them off to western investors they created bad banks called "Asset Management Companies" where the bad debts could be hidden. The AMCs issued bonds to the banks so it all looks very tidy from a balance sheet point of view - until a bank wants to cash the bond in. It all looks vaguely familiar...

    I guess the other thing you need to ask is how lucky do you feel with Chinese banks? The savings rate is circa 30% because there is virtually no social provision which leaves banks awash with cash. Ask yourself when you last saw a bank in this situation lend profitably over the long term let alone into a downturn. Problems will be hidden. Their turn next?

  • Comment number 52.

    We may all be scared about China's dependency on exports, however, I feel this is being over-egged.

    In a recent report by investment managers Williams De Broe, they disclose that China's economy relies only 9% on exports. Certainly, this sector will suffer, but investment and private consumption make up the greater proportion GDP.

    China offers significant investment potential, and invest we should, as markets are unlikely to be this inexpensive to access for a very long time.

  • Comment number 53.

    Forget Super China, what about Japan?

    It is is a whopping $7.8tn in debt, with a 187% debt-to-GDP ratio, shaping it up to be the mother of all bankruptcies.

    All of which makes Japan a prime target for a military conquest by a confident, resurgent and expansionist China.

    Is it too much to ask for our reporters to investigate the bigger picture?

    Or is it preferrable that they remain in awe of a country which could one day be colonising us?

    That's how it seems.

  • Comment number 54.

    #3:

    "It could almost have been Gordon Brown addressing the 3000 members of the National People's Congress in the Great Hall of the People under the giant red star."

    The analogy is a good one RP:
    Unelected leader, one party state; expect Gord would feel right at home, instead of looking uncomfortable on his ego trip to the "land of the free".

    ----------------

    If you are implying that either Britain is a one party state, or that Gordon Brown is unelected, then you are incorrect on a vast scale.

    In this country freedom of political speach is vast - you can support anyone from the BNP to the Green Party, Labour or Conservative.

    Gordon Brown is elected. He is elected as leader of the majority party in parliment by the members of the majority party. The majority part is chosen by the elected representatives - MPs who are voted in by the public.

    If you voted for your MP who was standing for the Labour Party which had elected Tony Blair as its leader, and then the Labour Party changes to Gordon Brown, then you have no right of recourse.

    In the UK, you elect a Member of Parliment who represents you usually by standing for a party of like minded people.

    Learn how the UK political system works before you spout you incorrect and small minded views.

  • Comment number 55.

    Unfortunately you aren't comparing like with like as so much of our public sector debt is being kept off balance sheet by PFI.

    This is so important to GB that he is lending £2bn to private companies so that they can take up lucrative PFI schemes and still keep government spending off balance sheet.

    Add in all the PFI liabilities plus Railtrack, then talk about public sector debt.

  • Comment number 56.

    Agree with everything in your article - but its unfair to just mention "US households and businesses" as the culprits who borrowed too much. The biggest borrower by far was the US Federal Government itself. And its maintenance of low interest rates for too long fed the excessive borrowing by households and businesses. Households and businesses were reacting to the economic situation as they always do. It was government policies that were wrong. And our own government was doing all the same things just as enthusiastically.

  • Comment number 57.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 58.

    #23
    You do make an inspirational point. I couldn't agree with you more.

    However, I wouldn't like to see that people here are raging a controversary though I understand the concerns about the future and so does everyone, whoever you are.

    Personally, now I find myself truly have an abstention of the topic for a feeling of mixture.

    But though I am convinced of the reality that saving is not the key point, I hope to reinforce the belief that the future is determined by details.

    Meanwhile, I wouldn't like to invade some personal views of twist of fate that history is repeating in an extreme opposite side as this ain't going to happen(and not allowed to) if we want badly enough.

    And eventually, there's a truth that if another wrong step is mistaken, everything is over.

  • Comment number 59.

    Re China - if someone sets up in business in competition with you but they are cheaper than you the immediate effect is that you lose your price conscious and also unloyal customers.

    Over the years often the competitiors quality improves and you lose some more customers until slowly, due to a higher cost base from when you were bigger your business becomes unsustainable and you fold.

    Often the original business can see and feel this happening over a period of time but never feels able to take the dramatic action needed to save itself until it becomes too late.

    Unfortunately it is already too late for us in the West - China has won and it is a question of what they do with us in victory.

  • Comment number 60.

    Quantitive Easing has arrived in the UK.

    £75 billion created and more than likely more to come!!

    http://tinyurl.com/b9nj4w

  • Comment number 61.

    http://news.bbc.co.uk/1/hi/business/7925620.stm



    Quantitative easing is sometimes incorrectly referred to as printing money, but the Bank will not expand the supply of money by making new banknotes.


    Instead, it will buy assets - such as government securities (gilts) and corporate bonds. But as it will not borrow to fund the purchases, it is creating new money.

    Excuse me? But the BBC are not telling the truth here, why not explain (in the same article) about m1, m1, m4?


    For those who cannot see whats coming, its inflation (but unlike the 70’s where wages actually rose) this kind will make us ALL poorer!!!

    Nice once Gordo / comical Ali!

  • Comment number 62.

    54,

    WHo elected GB to be PM?

    The electorate? Er Nope!

    The Labour Party? Er Nope again old boy.

    Get YOU FACTS straight!

  • Comment number 63.

    "Also, as I've been emphasising, China's giant state-controlled banks have been much more cautiously managed than our commercial banks - and have neither the capital or funding constraints of ours"

    Constraints?

    If anything, our banks need more capital constraints, surely, to make sure they keep higher reserves?

  • Comment number 64.

    Robert - slow down a bit and think about what your're writing. "And, of course, the US public sector is arguably mortgaged up to an even higher hilt than Britain's." It's either obvious or it's arguable, but it's not both.

  • Comment number 65.

    Individuals may have been prudent with their savings but Chinese banks have been lending to their cronies in state enterprises and universities all of which will be affected by the milder downturn. These would lead to massive writedown if properly evaluated. I would not be surprised if they end up propping up their own banks soon.

  • Comment number 66.

    More unfavourable comparisons with Blair abound today for poor Gordon Brown, following his speech yesterday!

    He should really stop doing things Blair did better, so the comparisons can stop.

    Such as being Prime Minister!

  • Comment number 67.

    Re 49

    As you rightly point out, the Chinese don't have a welfare system. They have "savings". We have "tax" and "pensions". They amount to the same thing in principle.

    People that critise the high savings rates of the Chinese and the fact that they are not consuming enough to stimulate demand.

    The Chinese have high savings rates for a reason. And its not just because they want to continually stuff money under the mattresses. They like trinkets as much as we do.

    Re 51

    I read a book a few years ago called the "The Coming Collapse of China" which attempted to convince me that the Chinese banks were in fact insolvent due to the huge SOE debt burden forced upon them by the state. It would be interesting to see the new analysis some 5 years down the line.

  • Comment number 68.

    While you're over the other side of the world enjoying a brief respite from HMG we have to cope with more bad news.

    ALL savers should now withdraw their savings from banks. GB doesn't care as he knows they won't. But they should. Cash in the attic is becoming increasingly more appealing. I certainly will be keeping some with my tins. Fortify your drawbridges everybody.

    Savers, pensioners are now propping up the bank all ways. If savers got more return on their money they might spend it. But no he thinks I'll give those in debt more money because they're more likely to. Well I think he's got that one wrong.

  • Comment number 69.

    #42 Ishkandar

    I took a look at your link.

    Doesn't say anything about China's currency manipulation, or subsidies for exporters or copyrite theft or product safety or disregard for the environment etc, etc etc.

    The sad truth is QE may eventually create the liquidity for us to buy more crappy subsidised tat from what's left of China's sweatshops.

    I'm normally a failry amicable chap but I must admit to loving every report of more Chinese tat factories closing down. I do not mind a fair fight but the chips have been so unfairly and heavily stacked in China's favour that people have been fooled into thinking its all about cheap labour.
    It isn't.

  • Comment number 70.

    Yes, gambling is one of the major problems in HK and China. So these people lost their money from their own savings or loan sharks. What is the ratio comparing to the mass over spending their future money in the west?

    You cannot inject democracy, it takes a lot of time. Also you can't expect other countries should have the same understandings or expectation on democracy to your standard.

    Bank failures hit hard to those people have been prudent in their saving. I know it is not fair to see your shares, pension, savings shrink to nearly nothing. It hurts me. But it would be millionaire times worst without the savings and carrying debts.

    To me, it is ridiculous or irresponsible to think that because of banks failure - the old habit of saving for rainy days is wrong or pointless. So if some schools are rubbish, then those kids should give up education. Right?


  • Comment number 71.

    The west may have become hooked on Chinese goods.

    But the Chinese have become hooked on the fact that we are hooked on their cheap goods.

    No imbalance lasts forever. The correction will be painful. More so I suspect for the Chinese than for us.

    I reckon my trusty CRT telly is practically bulletproof. It can last for another 16 years.

    I don't actually NEED very much stuff at all. And I suspect that when the chips are down noone else does either.

  • Comment number 72.

    7# bigsofa
    Your comment-

    ( China has lots of potential. Now I am a true believer. )

    Me too, China gave me a buzzing feeling of growth last year, as they say - every dog has his day.

    It's a global economy, so i find it amazing a few bloggers are blaming China for lending the west money and selling us tat, ( bet the computer your using to read this has made in China on it)

    The service received was second to none, the hard working Chinese people smiled and aimed to please rather than moaned.

    I felt totally safe all hours of the day and night in central Hong Kong, not a bing drinking youngster in sight, even smoking in the street was forbidden. H.K airport was spotless, spacious and welcoming, unlike Terminal 3 at Heathrow which resembled a dirty third world airport.


    I returned home with a new understanding that a county so huge, with so many people to control, made rules "that must be obeyed" in the best interests of all their population's human rights.

    My money would be on China weathering this economic storm rather better that us.

  • Comment number 73.

    "Wen Jiabao's China seems to want to play an important role in making the global economy safe for all of us."

    No he doesn't. The Chinese couldn't care less about our plight. They are, as usual, wholly motivated by self interest.

    Western governments are in hock to the Chinese for billions, if not trillions, of dollars. What if our banks go under and that debt isn't repaid? Not a lot the Chinese can do about that, is there! Sure they need us prosperous. They usually make loans in USD - if the US currency goes into freefall, and it may well do so yet, well, it could be like getting your loans repaid in Zimbabwean dollars.

    When it comes to the man in the street, the Chinese are desperate for us to buy their tat. And borrow up to the hilt to do so - the more tat we can buy, the merrier from their point of view. So of course they are gong to be making soothing noises, trying to get us to stop panicking that we are all going to be out of a job any day soon, to stop saving and start spending again. Oh yes, lets spend, spend, spend and save the world. The world? hardly. More like China, given they produce so much of what is actually in our shops.

    We are not panicking, just coming to our senses. Down with Chinese and any other tat. We've all consumed enough of it in the past few years to personally fill a significant part of a landfill. I for one am glad some of us have seen sense and jumped off the merry go round.

  • Comment number 74.

    Many of the commentators on this site have a good deal to say about the wickednesses presently implicit in the Chinese economy - lack of respect for copyright and trade mark, the production of tat, currency manipulation, poor quality and safety standards and so on.

    At the same time there is almost universal praise and respect for Japanese manufacturing and the high standards it has reached.

    Obviously these commentators are too young to know that after the war Japan behaved exactly as China is now behaving. It even named a town in Japan Scotland so that it could produce scotch whisky. A great many countries imposed a dumping duty on Japanese manufactured goods they were so substandard.

    But look at Japan today: the second biggest and most successful economy in the world. Then look at the size of Japan and compare it with China. Then shudder. We, and the US are yesterday's men. Tomorrow's men are the Asians (and I include the Arab states as part of Asia).

  • Comment number 75.

    I can see what people are saying here,but I cant see what or how something is going to be done.What does it all mean in terms of effects and actions?
    Three things mean something to me at the moment.
    1.That a different sort of economy came to pass with the advent of plentiful and accessible credit.
    2.That financial moves could be worked that benefited exclusively the practitioners of the financial markets,rather than,and to the cost of, the interests that they served,and using the assets of those interests.
    3.That more than ever,for me anyway,it is clear that the economy of a country,and the employment of the population hinges on the market,i.e. meeting the needs and wants of that population.
    If the paradigm allows the situation that HSBC has a problem with a £6billion yearly profit,with all the other stuff going on,it just seems bizarre.

  • Comment number 76.

    #62:

    http://news.bbc.co.uk/1/hi/uk_politics/6457597.stm

    There was an election - although it might have escaped your short sighted notice.

    Just because some stands unopposed for a democratically elected position doesn't mean they weren't elected.

  • Comment number 77.

    Quantitative Easing

    A good definition or analogy would be to think of diluting a pint of donered blood with a few ounces of petrol.

    A rather combustable and not a healthy mix.

    Do we really trust this Government to stop the printing presses once they start? It is so easy to have a UK Gilt Auction and for the BOE then to print the money to buy any surplus, not sold.

    This process is the child of inflation and will unleash pressures in the future which may well be impossible to contain.

  • Comment number 78.

    #22 guycroft

    I share your sentiments entirely. There is a deep feeling of helplessness combined with hopelessness brewing for the reasons you describe. I simply can not relate at all to the ruling classes thier values and the way they behave.

    Yet again the consensus of bloggers here have acurately predicted the next phases in far more detail and way in advance of the journalists and politicians.

    Further reductions in interest rates, printing money, accelerating unemployment plus an invisible tide of short working that would bump up the unemployment figures massively if that was included.

    Hopelessly inaccurate government revenue predictions, 'we live in uncertain times' they will bleat''. I would say just use the people who post on here then if you want an accurate picture of what is going on. But they will never listen, too mcuh vested interest, too many highly qualified well paid analysts to feed, whom also happen to be members of the same golf club (or similar).

    My instict initially when I started posting here in december was to try and fight to get the necesarry change, increasingly it is more on the lines of stocking up a great ark and moving away somewhere so we can start again once the current massive correction has worked its way through. I am beginning to believe this can not be stopped or turned into something positive to build a better future ..by anyone.

    Jericoa...

    P.S. Perhaps I should change my name to Noah now!!

  • Comment number 79.

    #49 twende-hombre

    I think china's 500bn stimulu is just about to do that.


    #53 scotbot

    Nobody wants to colony britain. The weather is awful and you don't produce anything. Just because you have the history of colonising other countries doesn't mean everybody would think like you.
    We chinese are fine in our land. we just want to have enough food and shelter for everybody, that's all.

  • Comment number 80.

    ahoy there # 19 anewworld and all fellow Mullerites

    I did indeed attempt to board the cruise liner Balmoral yesterday but they escaped - for now; zigzagging furiously through heavy seas, just like your very own Gordy

    My spies in London had informed me that a large number of retired 'merchant bankers' set sail on the Balmoral 2 weeks ago with vast amounts of readies in the form of pension lump sum payments

    My Somalian stimulus package does not depend on fiscal or monetary policy or in printing money

    We remain firmly in favour of the gold standard and the traditional redistribution of income directly from the undeserving wealthy to the deserving pirate

    Mark my words, there will be no bailing out of banks or Quantitative Easing here. The only QE we want to see off the Horn of Africa is that big boat of yours.

  • Comment number 81.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 82.

    as for the Chinese question:

    it seems to me that there dependency on exports as a % of their GDP must be far less than Japan's or Germany's; most of the Chinese economy remains domestic and rural and isn't even measured

    whatever the exact size of their stimulus package, it seems that none of it is going to their banks, which don't need it; instead it will go direct to infrastructure work and domestic activity, which is far more effective

    I also read in the NYTimes that the Chinese govt are looking at improving welfare and social benefit payments; that would boost domestic spending whilst also lowering the dangers of civil unrest, thus killing two birds with one stone

    the Chinese are not only in a better position that our 'tapped out' western consumers and economies, but also appear to have leaders with a firmer grip on economic theory and practice

    as for the 75-150 bn of QE just announced here:

    it yet again makes the terrible mistake of routing the so-called stimulus via our zombie banks, so won't reach the people who could/would spend it

    it is in any case not enough

    and it therefore won't work! but might undermine the pooond

    see Simon Jenkins' article in yesterday's Grauniad for an excellent rant against the got policy of stimulating the banks and nobody else

  • Comment number 83.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 84.

    76,

    Incorrect there I’m afraid, as I recall no one stood against GB. Call that an election do you?

  • Comment number 85.

    We could go on talking about the rights and wrongs of the past system forever, but it will get us nowhere. Is there anyone who would like to talk now about what we want for the future? And do forget about re-creating the past. It is lost and gone forever.

  • Comment number 86.

    #72

    I'm afraid to say that you've just been making your view shorter. Hong Kong is one of the cities that is second to none and now it can qualify as a part of China, following by Taiwan and Shanghai, in that order. I don't pretend to be a conservationist as personally I am not that environmentally friendly person to tell you the truth. I suppose you haven't paid a visit to the mainland, discovering those resource-sucking persons.

    The concentration is not the persons, and I hope you don't intend to attribute the moment spectacular of China to so-called good-mannered people in China, and that you think it is some of ill-mannered western people that cause the very recession.There are gangs exsisting all over the world.

    Apart from that I don't want to criticise those who blame China's lending money and its expansionist as it has its own reason at all. You have every reason to reject. How about a productive plan to save yourself?

  • Comment number 87.

    The western (and mainly American driven) propaganda machine has fully worked judging by many of the posters on here hasn't it. We still fear that big bad China and Russia will use this as an excuse to exercise some military might and go empire building.

    Why is it that if a "foreign" country does something we don't like we are quick to point the finger of hate? Didn't we invade both Iraq and the 'Stan with the states for economic and political reasons (I fail to see the defensive position that was taken in toppling governments). Why do we tar others with our own brush?

    On another point, one of the biggest issues this country faces is inflation. The bank have over-cut and will devalue our currency further which given our reliance in imports will just put prices up. We are benefiting from fairly low oil prices, if these rise and we have another bad harvest this year, expect to see spiraling inflation. How easily can the BOE move from 0.5% to 5% interest rates again (given large unemployment)? Not looking good for the next few years is it?

  • Comment number 88.

    re. 78 jericoa

    I think we all feel the same way, there is nothing yet happening to build momentum for a clear-out if the idiocracy.

    But I reckon it will happen; just need the commentators and the opposition to get a lot more bolshie and disrespectful.

    I fear that the great leader has to run us completely into the ground before anyone on the inside stops him, so we probably have to ride it out meantime.

    There was talk of a 'mass gathering' of the great unwashed public at the time of the G20 summit.

    I would go to that.

    I think it is likely to be semi-spontaneous, there seems to be no central organisation for dissent to rally around in this country.

    Regards,
    in a true democratic sense,


  • Comment number 89.

    One key difference between Chinese unemployment and US and UK unemployment.

    The guys who lost job in China used to be farmers. They still have their land granted by the government. They can go back to farming if they have no 'jobs' in the city. They don't have mortgage and debts, although no doubtable, their living standard will be lower.

    If you loose your job in the US and UK...You know what is waiting...foreclosure, bankruptcy...

  • Comment number 90.

    #27 - penshawdave wrote


    Those who produce enough food for their own use.
    - Thanks to successive Government and EU policy farming has been decimated as small holders are forced out by factory farming - which is often based on large debt. Add into this the fact that we cannot control foot and mouth (and even our laboratories cannot contain it - and don't moderate it, it was found in the Government report!), we're in trouble with this one.

    Those who produce enough energy for their own use.
    - Thanks to Thatcher - we sold off our North Sea oil and closed our coal mines - and Tebbit had the nerve to say on Radio 4 this morning that she was not stupid nor rash nor was she ideologically motivated! - well it seems that if she was right, then the rest of the world must be wrong.

    Those who can "control" their population with low wages and living standards.
    - They're working on this now, but don't forget they can use force to control the population (like over-reaching anti-terror laws)

    Those who can "take" what they what from other nations.
    - This is the one thing we were good at, and now we're not even much use at that. If you believe Iraq and Afghanistan was all about oil - then it's funny how only the US have benefitted from that. We (the lap dog) did a lot of running for no reward.
    A diminished army, a reduced (once great) Navy and I'm not even sure if there is much of an AirForce left anymore.

    Britain is actually heading for it's true place in the world stage - somewhere between Sweden and Bulgaria. We only recieved our high status in the world after we annexed all the countries that could not adequately defend themselves and 'colonised' them (i.e. raped and pillaged all their resources).

    Britain is not BIG and it's certainly not CLEVER.

    We will have to get used to playing someone else's tune rather than being the "piper"

  • Comment number 91.

    #78 Jericoa

    "Further reductions in interest rates, printing money, accelerating unemployment plus an invisible tide of short working that would bump up the unemployment figures massively if that was included"

    No, it's OK, they're not actually 'printing money' - they're doing something called "Quantitive Easing" which MUST be something entirely different.

    I don't know which is worse, the fact that the 'expert opinion' is nothing more than an "ill-informed guess" or that the Government is SO STUPID IT REALLY THINKS IT CAN FOOL US BY NOT MENTIONING PRINTING MONEY.

    I have watched these a**&%$£$*s in action, and they really are so arrogant they think we're all as dumb as the pop idol audience.

    WE WILL GET HUGE INFLATION RISES

    THE PENSIONERS (current and future) WILL SUFFER

    Even the 'un-precidented times' waffle angers me so much. These times are not un-precidented.

    EVERY SINGLE RECESSION AND DEPRESSION HAS BEEN CAUSED BY BANKS OVERLENDING IN A DRIVE TO INCREASE THEIR MARKET SHARE - WITHOUT EXCEPTION.

    Anyone who says different is a complete liar - or an ill-educated fool.

    Just because the symptoms are different, it doesn't mean the disease isn't the SAME OLD ONE.

    What the Government actually means to say is
    "Yes, we know the system doesn't work too well, but we're too stupid / lazy / or benefitting too much ourselves - to change it"

    The fact that it literally kills other people is of no consequence to them. It's a ever decreasing spiral of selfishness which starts from the MAN WHO CANNOT APOLOGISE FOR HIS MISTAKES.

    GB's refusal to admit his part in this mess will cost him his job, either by the voters or decapitation by his own party.

    Seriously, how can anyone criticise the criminal elements in society when our Prime minister is so comfortable with lying to the people and covering up his own mistakes he's gone to the point of dis-honesty.

    I shall not weep for a single one of the 500 or so MP's who will suffer as the credibility of politicians sinks to an all time low.

    I'm going to vote for Obama in the next election, I know he's not even standing, but the options open to me are just not going to CHANGE A SINGLE THING.

  • Comment number 92.

    #87 horneddevil

    "Why is it that if a "foreign" country does something we don't like we are quick to point the finger of hate? Didn't we invade both Iraq and the 'Stan with the states for economic and political reasons (I fail to see the defensive position that was taken in toppling governments). Why do we tar others with our own brush?"

    I completely agree - and if I were a foreign country I would hate Britain and America with a passion.......oh wait a minute - they alreay do.

    Does anyone really believe that after all the colonisation and illegal wars and hypocritical abuse of international law (including torture) that there is a single foreign nation that ACTUALLY WANTS TO HELP US????

    If I were the Russians I'd cut off our gas

    If I were European I would deny entry to the Euro for those countries who only turn to it as a desperate measure.

    If I were China I would be asking for my money now - paid in full - final demand etc.

    If I were a commonwealth country I would give us the bird and say 'See ya later'

    If I were an African country I would offer to 'assist with the re-growth of our country' by imposing martial law and re-drawing all the county boundaries and not allowing people to freely pass through them.

    Finally, if I was any other country in the world I probably wouldn't care anyway. It's not like we ever flew in to help others unless it was in our own interests.

    A sad reflection on what our society has become - soon we will be the needy and we are going to rue the day we decided we were powerfull enough to 'run the world as we see fit'.

    Flights to Oz - one way £399 - Cathay Pacific

  • Comment number 93.

    It is to focus on solutions and forget about laying blame. In any case that blame certainly does not lie with China.

    With hundreds of millions of workers subsisting on a few dollars a day I do not think that I would trade our circumstances for theirs anytime soon. It is important to distinguish between the financial strength of the government and the economic strength of the country, which has to include social factors. China is undoubtedly financially strong and should be in a good position to build their economy.

    Our financial weakness is unfortunately having deleterious effects on our economy.

    I cannot understand what is holding back governments around the world from addressing the banking crisis in an effective manner, rather than dealing with piecemeal Band-Aids for each individual bank. Investors in our economy need to know the rules. A resumption of investment through the stock markets would add to confidence of consumers and businesses.

    One of the easiest things to do would be to eliminate the mark to market rules in establishing bank reserves. Because there is no market in a security does not mean that it will be absolutely worthless over time.

    There has to be some value greater than zero for the so called "toxic assets". The government is in the best position to hold these for the longer term when their "true" value will become more apparent. So what is holding back the creation of a toxic bank?

    While it may be anathema to some investors the alternative to doing this would be to nationalize any bank in a financially precarious position.

    One way or the other, governments have to address this and soon.

    Robert, I find your explanations very illuminating. Perhaps you could explain in a future post what is holding the governments back from addressing the banking crisis in other than a Band-Aid manner.

  • Comment number 94.

    If the Chinese are in a cooperative mood, we should offer to reciprocate with more than just rhetoric about anti-protectionist measures.

  • Comment number 95.

    Well said Don_Kuan #15 and topbear1974 #79

    China is obviously better-placed than we are here in the UK as the Chinese government can go ahead and spend some of its savings on infrastructure projects etc. We can't....we haven't got the money!!! GB says we will be spending but then we just get deeper into debt. I would say to the Chinese government get spending quickly because your savings ain't going to be worth much soon. When our QE(quantative easing) kicks in our GBP and USD are going to be much diluted. In effect our currencies (UK and US) are being/will be devalued.

    How GB can hold his head up and blame the world when he spent tax-payers money as if it was going out of fashion is beyond me. I thought the Scots were meant to be frugal and penny-pinching. Sorry I don't mean to be racist; I'm sure this is a very inaccurate stereotype!!!

  • Comment number 96.

    #35 ishkandar

    Do you honestly think that China has engaged in good trade practices ?
    Hint: Think artificial currency values !

    And China's Balance of Paments surplus. Do you think that a huge surplus is a good thing ? For the World, or even China itself ?

    And do you approve of all of China's entanglement in Africa ? Pure altruism, I suppose.

    And have the ruling elites in China been at all fair to the vast majoity of its own citizens ? Health Service, Pensions, Human Rights ? Political Choice ?

    And China's contribution to Air Pollution has been fine and dandy no doubt?

    The PLA and China...together...now there's a powerful duo for future human happiness.

    The West has its faults...and so does China, in bucketfuls.

  • Comment number 97.

    89, bylooker:

    "One key difference between Chinese unemployment and US and UK unemployment. The guys who lost jobs in China used to be farmers."

    Although I can see what you're getting at, your average journalist is too many generations separated from people who lived off the land to grasp the concept.

  • Comment number 98.

    Robert,
    Why does everyone overestimate China? I've been there 30 times over the last 3 years. There are tremendous problems beneath the surface.

    The surplus is irrelevent when you look at their future expenditures - no social security, no healthcare or insurance system, environment disaster, huge cancer spikes, massive societal dislocution, no rural education and an 800 million person rural to urban migration underway and no supply chain - zero refrigerated distribution - to provide food stuffs to the future mega cities that will house them.

    China must transition from the factory floor for the world to more Singaporean innovation model to survive. Given the global recession, there export driven economy will slow tremendously, and producers will look to other countries for cheaper labor. Think Japan.

    The banks don't lend, like our banks, and are still sitting on unknown amounts of legacy debt from long ago, when they were government grant giving entities. No one knows where the $900B dollars in Fannie and Freddie bonds are held. With Goldman and Morgan Stanley being their chief economic advisors, I'd suspect they are sitting on significant quantities of MBS and CDO securities too.

    Based upon my business experience with Chinese banks and private equity groups, I doubt, as do many Chinese that the surplus is there and not in individual politicians off-shore accounts. Every deal had set asides for SOE and bearer share corporations as partners. Usually those corporations included high ranking government people - guangxi. All the leading politicians function as holding companies for their own subsidiary corporations.

    I'm not judging, as it is more cultural than corruption based. But, needless to say, they are an industrious, ambitious people, a huge market that most want to see succeed particularly the US. They just have a lot of challenges to overcome to move to "first world" status. Let's hope they have the wherewithall to succeed.

    Remember, governments come and go, the people remain the same.

  • Comment number 99.

    92,

    Mind and take a lot of water with you, youre going to need it.



    Canada on the other hand ............

  • Comment number 100.

    Re 82

    Supercalmdown would know what to do with the QE money.

    I reckon pumping it into high tech micro manufacturing businesses would be the best bet.

 

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