Will China rescue the West?

 
Shanghai city skyline

From a rooftop terrace on Shanghai's historic Bund, overlooking the city's magnificent skyline, it was difficult just a couple of hours ago to believe that global markets are in meltdown.

It was all deluxe brands and boomtime euphoria at a party thrown by Sir Richard Branson.

China is still working hard and partying hard, more skyscrapers are blotting out the sun, and its business leaders regard the crisis in the rich West with both detachment and a sense that the cloud over the US and Europe may provide an opportunity for them.

Guo Guangchang, the chairman of Fosun, China's largest conglomerate, told me in an interview that he will take advantage of the fall in share prices to take big stakes in Western businesses - but only where those businesses have the potential to grow in the one place where he sees growth as assured, China.

Over at the largest lighting manufacturer in China, NVC, its chairman, Wu Changjiang, says if his export markets in America and Europe tumble back into recession, he will simply prioritise selling to China - where he says the demand is becoming stronger.

That's the point. There are signs of modest economic slowdown in China. And the Hong Kong and Shanghai stock markets have caught the same cold as the London Stock Exchange and Wall Street.

But China is a world away from slump - and the mood among the Chinese elite is that their country is better protected from the turmoil in the developed world than it was during the great banking crisis of 2008, when China's economy temporarily ground to a halt.

That may be naive. But it also means that although the financially strong Chinese government and Chinese businesses are in a position to help the ailing richer economies - by lending to countries with excessive debts, like Italy, by investing in companies short of capital, even by backing infrastructure projects that create jobs - they will strike a hard bargain.

Little sympathy

That hard bargain might be Western governments being less resistant to the idea of Chinese businesses buying companies in the US and Europe that are regarded as somehow of strategic national importance to us.

The Chinese might also demand the relaxation of restrictions on the exports of certain technologies to them.

The big point is that I got absolutely no sense here that the Chinese feel we are all in this together.

Intellectually they understand that China's vast trade and financial surpluses are causally linked to the unsustainably large debts of the US, UK and a swathe of the eurozone.

But emotionally they take the view that the US and much of Europe have lived high on the hog for too long - and that we need to clean up our own mess.

 
Robert Peston Article written by Robert Peston Robert Peston Economics editor

Which budget will matter?

As and when decisions on income taxes, welfare and public spending are devolved to the nations, will the budgets for England, Scotland, Wales and Northern Ireland become more important than the UK's famous budget?

Read full article

More on This Story

More from Robert

Comments

This entry is now closed for comments

Jump to comments pagination
 
 

Comments 5 of 298

 

Features

  • HandshakeKiss and make up

    A marriage counsellor on healing the referendum hurt


  • Pellet of plutoniumRed alert

    The scary element that helped save the crew of Apollo 13


  • Burnt section of the Umayyad Mosque in the old city of AleppoBefore and after

    Satellite images reveal Syria's heritage trashed by war


  • Woman on the phone in office10 Things

    The most efficient break is 17 minutes, and more nuggets


  • Amir TaakiDark market

    The bitcoin wallet with controversial users


BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.