China’s biggest private car maker, Geely, is not only taking Sweden’s Volvo off Ford’s hands.
It is also buying Manganese Bronze, the company that makes London’s famous black cabs.
Bad news? Hardly. With Geely’s help, Manganese Bronze is more likely to crack the huge Chinese market, now the world’s biggest.
Private consumption is 7% up on pre-crisis levels in the 10 largest Asian economies (excluding stagnant Japan) http://bit.ly/9hxgPW
In recent years, Western governments have voiced concerns about Asian governments’ vast sovereign wealth funds (SWFs) investing in Western companies. Some called this "investment protectionism"
But as Western banks faced collapse, they were delighted to receive capital injections from Asian SWFs – and Western governments didn’t object. In a crisis, needs must.
Now, though, Asia’s SWFs are having second thoughts.
China Investment Corp, the country’s sovereign wealth fund, will no
longer risk investing in western financial institutions because of
concerns about their viability and a lack of consistency in their
governments’ policies, according to its chairman.
“Right now we
don’t have the courage to invest in financial institutions because we
don’t know what problems we will put ourselves into,” Lou Jiwei said.
Perhaps Western governments will realise that the only thing worse than receiving investment from Asia’s sovereign-wealth funds is being denied it.
For years, the US has lectured China on how it should run its economy. Now, the tables are turned.
US Treasury Secretary Hank Paulson went to Beijing to urge the Chinese government not to let its currency weaken.
The Chinese hit back in style. Zhou Xiaochuan, governor of the Chinese central bank, urged the US to
rebalance its economy.
“Over-consumption and a high reliance on credit
is the cause of the US financial crisis,” he said. “As the largest and
most important economy in the world, the US should take the initiative
to adjust its policies, raise its savings ratio appropriately and
reduce its trade and fiscal deficits.”
The balance of power in the world economy is shifting faster than most people realise.
I’m just back from the Adelaide Festival of Ideas, which was great. The 24-hour flight and 8 1/2-hour time difference are still killers though. I participated in a discussion about the future of India and China on my first evening at the festival, which was rebroadcast on ABC’s programme The National Interest. I also gave a talk about my book, and participated in a panel discussion called People without Borders.
In a comment on my recent post on the contribution of trade liberalisation to Asia’s success, Jim takes issue with my contention that
China and India are very powerful examples of the benefits of
liberalisation: before they started their reforms, growth was slow, but
as they have opened up their economies, growth has accelerated.
He argues that growth speeded up before they opened up, and that their growth since they opened up is not due to freer trade.
The AFL-CIO, America’s biggest trade-union federation, is petitioning the Bush administration to impose economic sanctions against China for violations of workers’ rights. The unions claim that the exploitation of Chinese workers is not only morally repugnant, but also economically damaging, alleging that it has cost 1.2 million US workers their jobs. They say this amounts to an unfair trade practice to which the US should respond with trade sanctions against China. But their proposed solution is as wrong-headed as their analysis of the problem.