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

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  • Comment number 298.

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

  • Comment number 297.

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

  • rate this
    0

    Comment number 296.

    Why would China want to help a Third World economy such as ours? As with all fire sales they'll soon be able to walk in and take what they want for next-to-nothing without having to pump trillions into the UK, Europe or the USA.

  • rate this
    0

    Comment number 295.

    The problem with global economy is it's current dimension; it is Globalised one. As a result, it is 'Too Big to Fail', but also 'Too Big to rescue'. That needs a Globalised morale to act, what IMF pledged originally, with it's inception. If China takes over the IMF the issue will become more political one than just remaining within the limits of economic failure. Hope it's not too late to address.

  • rate this
    0

    Comment number 294.

    Perhaps China feels that the West has not the will to sort out its problems and cannot come off the addiction to debt.

    This is in China's favour where in the end we will all have to slave away to pay the interest on this debt making China the world bank.

    I really can't see this happening unless they have military superiority too.

  • rate this
    0

    Comment number 293.

    IR35 @22

    Correct. China is the Worlds capital of Capital Punishment.
    Southern States of the US- not in the running.
    Iran or Arab Dictatorships- mere amateurs.
    At least 80 Capital Offences in China ranging from Murder, Economic Sabotage, even to Hooliganism (if they wish to make an example of you.)
    Then your Family are charged for the bullet used and Army whip your Organs out for re-sale.

  • rate this
    0

    Comment number 292.

    Guy Croft @244
    "Never quite understood"
    Quite
    As @210, Greed rampant will undo ALL
    Even those who think themselves 'free', GC

    outsidethebox @251
    "I do not see why"
    There IS self-interest in SHARED GOOD…
    And MORE than in oppressive advantage

    Controlled default NOW, or a WORSE default SOON - worse for ALL

    AND better an AMICABLE than a HOSTILE controlled default

    Home Equality

    Convergence

  • rate this
    0

    Comment number 291.

    EdwinaTS @240
    Need for ALL

    freddie @69.91
    Most vital

    EQUAL worth MORE than AVERAGE Income

    Worth counting ways…

    SECURITY: for self, loved-ones, ALL

    ACCESS to WHOLE of market: for ALL

    REPRESENTATION - of ALL by ALL: ALL walks, Industry, Politics

    UNIVERSAL FREEDOM OF CONSCIENCE - change jobs for better

    FREEDOM OF INFORMATION - no monopoly patents / commercial secrets

    SUSTAINABILITY!

  • rate this
    0

    Comment number 290.

    freddie @69,91
    Vital points

    "Wanting best for kids" - ambition allowed to ALL?

    "Who wants slave wages" - implies slavery just for OTHERS

    "No freedom (without privilege)" - Inequality Insecure, equality secure

    "(Not) allowed to pay (bearable amount)" - no fair deal, NO fair PAY

    "Chinese… wait & take" - better a diminished than NO market

    Democratic Equality, strength shown, spread to all

  • rate this
    0

    Comment number 289.

    "Perhaps naively, Chinese business leaders feel insulated from the global stock-market rout and economic slowdown in the US amd Europe"

    They built their wall. Unfortunately it doesn't stop the ebb and flow of money.

  • rate this
    0

    Comment number 288.

    Greece is just a tiny symptom of the greater malaise Being small, it can be bullied using interest rates and such mechanisms. Sort Greece and everywhere else all the debt problem is still there to shackle the people into the foreseeable future. How's about we coordinate a mass, multinational default and just start again a bit more carefully next time!

    I think it'll happen anyway.

  • rate this
    0

    Comment number 287.

    I will be ever grateful and honest and sincere to you .wishing you to visit http://youhavewonyahya-youhavewonyahya.blogspot.com and http://getpaidatlink.blogspot.com
    my respectful Thanks.

  • rate this
    0

    Comment number 286.

    can you please read my post at Have_your_say. sent many say. or please visit http://youhavewonyahya-youhavewonyahya.blogspot.com with a solution to your article.

  • rate this
    0

    Comment number 285.

    Hi dear Robert peston,
    You are great and I like to call you after reading this article as you are a "Man of Articles". In my Family and in working area People use to call me as "Man of solutions". I do not know the truthful in this award. But I am certain and proud to say that you are the "Man of Articles" .
    BBC will be proud to have you and you will be in top in the world by BBC

  • rate this
    0

    Comment number 284.

    China in charge of the colonic drip means we could see red hot chilli peppers at the end of the funnel before the realAAA runs

  • rate this
    0

    Comment number 283.

    You can AAAllways rely on politicians to AAAtempt to dig themselves out of AAA[Security]hole .
    It guarantees upwardly mobile access to the seats of power
    High O High O iTS OFF TO WORK THEY GO
    High O hIGH o High O High Owe

    The question is weather the Chinese will give their blessing to the AAAcomodation between the governments ring fence and the city square mile packed with AAAncient Greace

  • rate this
    0

    Comment number 282.

    Don't look to others to sort out your problems. Stop spending on imports, taking foreign holidays etc & invest in Britain. If you don't support the products of your own labour, who will?

  • rate this
    +1

    Comment number 281.

    Perhaps the question should not be will china rescue the west, but do the west deserve to be rescued.
    As a group we constantly wage illegal wars murder millions of innocents in other countries just so we can steal their resources and even treat our own poor as sub-human
    So no the sooner the west is destroyed (and rebuilt based on fairness and decency) the better for the rest of the world and us

  • rate this
    0

    Comment number 280.

    The bankers caused the initial ecconomic problem, but it is perpetuated by China's currency being maintained at an unrealistically low rate. Until Western politicians devalue their own currencies to reflect the actual equity, no sustainable recovery can be achieved. Internal cuts are not the answer, it is parity of currencies. Then stimulation of the ecconomies will work.

  • rate this
    +1

    Comment number 279.

    274.stevep2342:

    What are you talking about? China does not hold grudges for stuff that happned 200-300 years ago. Its just like the British to assume everyone is an enemy, Kind of like how we consider Germany bitter rivals in football but they don't see us as bitter rivals [they hate Holland]. Don't worry China doesn't hate the West, they're to busy with Taiwan etc.

 

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