The manager, who wanted to remain anonymous, said: “The Chinese delegation has said all week that there will be double-digit growth for years to come and the Brits have lapped it up. But the data doesn’t add up. We think we’ve experienced credit bubbles over the past few years, but China is the biggest. And yet the global economy is looking to China as not just a crutch but a springboard out of the recession. It’s crazy.”
Read the entire Telegraph article here.
Fortunately, the Financial Times reports that there is a growing backlash against the Chinese form of globalisation, even in countries like India:
For a start, India and many other developing countries are aware of the risk of being steamrollered by China’s manufacturing machine, especially when it is bolstered by a quasi-mercantilist economic strategy that keeps the Chinese currency undervalued against those of many of its emerging peers.
One Indian executive reflects that his country ships plastic pellets to China that are then made into buckets. If India cannot even make plastic buckets competitively, he implies, its battle will be tough.
Dilma Rousseff, Brazil’s new president, has meanwhile indicated that one of her first priorities will be holding talks with China about its currency and trade policies. “This is an issue not only for Brazil but for all emerging countries,” says Fernando Pimentel, her new trade minister.
I have always been a firm believer in global free trade. However, it is quite possible that a protectionistic approach is the only way to limit the damage created by the Chinese form of globalisation - and the Big Bubble that eventually will burst.
Addendum (1.50 PM, 18.1.)
I just noticed that an Australian professor also seems to be advocating some kind of protection against the Chinese:
True, if a small economy like Hong Kong manipulates its exchange rate, the harm to the rest of the world is mild. But when it is an economy like China's — already enjoying the advantages of cheap, hardworking labor and the economies of scale provided by a large domestic market — the damage to others can be enormous. The U.S. lost much of its industrial base back in the 1980s as Japan used its undervalued yen to wipe out competing U.S. companies. Now it faces the same risk from China.
A favorite argument of the free traders is that if China wants to provide us with cheap manufactures, then let it. We will concentrate on advanced manufactures. But by exporting those cheap manufactures, China improves its industrial base so that soon it can compete in advanced manufactures. Meanwhile, the rest of us weaken our industrial base as cheap manufacturing dies out. Soon we cannot produce anything.
Read the entire arcticle.