Lol. The only funny thing in all this is how people pretend to be surprised at the course of events.

You mentioned an very interesting point. See most government starts to open their wallets to spend out of nothing instead of dealing with some structural issues. It’s interesting to see how it ends up.

OK, let’s say IMF is politically biased and last quarter was bad for global trade & export dependent economies.

Lets look at the private sector 2009 projections -

CITIBANK

US : -2.3%
Japan : -3.4%
Euro Area : -2.7%
Asia Pacific : 4.6%
China : 7.6%
India : 5.5%

CREDIT SUISSE :

Global : 1%
US : -2.3%
Japan : -2.1%
Euro 15 : -2.3%
UK : -2.5%
Non-Japan Asia : 5.4%
China : 8%
India : 5.5%

CLSA

US : -1%
Japan : -1.5%
Euro : -1.5%
China : 5.3%
India : 5.5%

MORGAN STANLEY :

Global : 0.1%
US : -2.4%
Japan : -2%
Europe : -1.5%
UK : -1.3%
Asia – ex Japan: 3.5%
China : 5.5%
India : 4.3%

GOLDMAN SACHS

Global : 0.6%
Advanced Economies: – 1.2%
US : -1.6%
Japan : -1.6%
Euroland : -1.4%
UK : -1.5%
BRICS : 4.7%
Asia ex-japan : 4.4%
China : 6%
India : 5.8%

Its a slowdown alright, but not a train wreck like in the developed world and the downturn is due to the knock-on effects of deleveraging in US/Europe, brought about by the financial crisis. In another 11 months we would know who is right and hopefully there is no Smoot Hawley II

Good to see the nexus between China’s low employment share (of GNI) and its stagnating level of consumption discussed again. There is only one way to fix that: higher wages. But there is no institutional framework to make wages go up (unions and collective bargaining might help) in a disciplined manner and the market is still in structural oversupply (at least in low-skilled work). However, a warning is in place. Although the data confirm intuition, it is quite posible that both the system of national accounts and quirky Chinese implementation lead to exaggerated results. I wonder how rural workers who are not self-employed farmers but may receive all kinds of income in kind, are treated, as well as the many millions of unofficial (non-hukou) urban workers. I would not be surprised if “profits” contained a growing lsice of quasi-wages. But this should be the core issue when dealing with China diplomatically about trade.

Twhofish’s recommendations appear to reveal an unexpected degree of sympathy with people in the party who have not given up on non-laissez-faire economics (I wonder what label should be used here: communitarian? (no, where’s the civil society here), social democracy (no, where’s the democracy?) enlightened authoritarianism???. It is clearly not old fashioned communism. I would rather put more money in people’s pockets than offer then all kinds of free services instead. Once the shift from the countryside is complete, the country would be lumbered with UK style government. Or is Twofish thinking of a Singapor model with Chinese characteristcs. As the great mr Zhu said: what works very well in Singapore might not work at all in China.

Anyway, I would applaud more discussion of the phenomenon (is it really there) of a declining employment share (who gains) with its implications for class politics (now China is largely an industrialized country with 19th century social characteristics, what about introducing some class-based ideological debates?) I can hardly believe that a “communist”party is ideally qualified to oversee the relative impoverishment of the Proletariat or that such a policy would guarantee the Party’s ultimate survival. If all these GNI non-employment residuals end up in private hands, OK. Sooner or later market response will correct that. But if it simply enriches the State, we have another problem, that the SOEs will be there to stay, tempting would be Oligarchs and misallocating profits that are partially (not merely) the result of wage suppresion. Essentially consumers subsidizing state businesses. Who would benefit from that?

after a while you have a state/business combination that is hostile to civil society and shows massive entrenchment of businessmen/bureaucrats/politicians.

Some good ideas, however…

China had a real estate boom already…so they don’t need Greenspan for anything.

Wal-Mart sells food now, but the disturbing thing is they sell Asian shrimp.

The Japanese would do massive quantitative easing the moment after China buys yen.

Ceo’s never listen to anybody.

What if the PBoC bought gold?

Let oil be traded in yuan…ok, but I think the US should be allowed to charge China for at least a part of our $500B defense budget.

Whaddaya mean the Fed is screwed up? They have a business similar to Citi now, except they have the thing that was missing in Citi’s business plan…a printing press. So what could go wrong?

1 outsave them. the ordinary american citizen should be given incentives to buy treasuries. buy one get one free if you hold for ten years ? – that would hit the throughput of electric kettles at wall-mart.

2 the chinese could sell their dollars and buy yen. they would have the fun of seeing their asian rivals roasted on the spit of yen appreciation. then the japanese would have to ‘manipulate’ their currency against the dollar an be the bad guys for a change . . .

3 counter advice : the chinese could bring counter nagging to bear – regularly advise wall street c e os to stop investing in art and yachts and just blow their millions . . .

4 or an international agreement to replace the dollar as the reserve currency, so that the chinese are left saving something else ?

5 or let oil be traded in the yuan for a while, organise a private takeover of china’s central bank (model it on the fed) and see if they make as big a mess of it as you guys just did.

6 send them greenspan.

http://www.reuters.com/article/usDollarRpt/idUSN2637778320090126

WASHINGTON, Jan 26 (Reuters) – The Chinese yuan currency is “significantly undervalued”, the head of the International Monetary Fund said on Monday.

IMF Managing Director Dominique Strauss-Kahn said the IMF had been “straightforward” on the issue of the yuan’s value and repeatedly said the currency was undervalued. Last year, he also called the yuan “substantially undervalued.”

Last week U.S. Treasury Secretary-designate Timothy Geithner said that President Barack Obama believes China is manipulating its currency, a statement that former President George W. Bush’s administration had avoided.

A commentary by China’s official Xinhua news agency on Sunday said that such criticism over its currency was misplaced and unfair.