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Naturally this article in the New Republic is a platform to point the finger at something bigger. Not entirely wrong, but the US financial system has run amok, and part of the answer lies between the Hudson and the East River.
As much as I shy away from granular economic policy debate, this piece on VOX is just too important to miss. Anyone interested in policy, economics, or both needs to read this piece by Olivier Blanchard, the Chief Economist of the IMF.
Interesting take on the new five year plan. Why do I think Accenture is moving into the corporate communications business? Read the last section.
"China’s recent operation to evacuate its citizens in Libya saw PLA ships and aircraft pass through the U.S. Central Command’s (CENTCOM) area of responsibility (AOR), suggesting that contact between the U.S. and Chinese militaries in the Middle East is likely to increase. To help policymakers, we give a brief rundown of China’s strategic and economic interests in countries within the CENTCOM AOR. As Exhibit 1 (below) shows, energy is a key interest, with countries in the AOR accounting for more than 2.2 million bpd of oil supply to China in 2010 (~45% of China’s total oil imports)."
"The PBOC is decreasing the share of its portfolio that is made up of U.S. Treasury securities, while increasing its rhetoric in support of the Euro, along with increased purchases of Euro-denominated sovereign debt and infrastructure investments across Europe (from a highway in Poland to Romania's power grid). "
"So are China’s leaders again underestimating their economy’s growth capacity? Or might their forecasts of slower growth just be another Machiavellian ploy to deflect foreign pressure to revalue the renminbi?
There is reason to think not – that this time Chinese officials are convinced that a slowdown is coming."
"
China's government is promising an economic overhaul that would raise the status of consumers and entrepreneurs but has given no sign how it will tackle its politically volatile reforms."
"In Egypt, at least twenty-five per cent of young workers are jobless. Inflation, even before the recent spike in food and fuel prices, has been a persistent problem throughout the region, and corruption is endemic. The autocracies of the Arab world have been as economically destructive as they’ve been politically repressive. "
"And so, Christie goes on, forced to cut more than $1 billion in local aid in order to balance the budget, he asked the teachers not only to accept a pay freeze for a year but also to begin contributing 1.5 percent of their salaries toward health care. The dominant teachers’ union in the state responded by spending millions of dollars in television and radio ads to attack him."
"Vallejo, a city about 25 miles north of San Francisco, offers a sneak preview of what could be the latest version of economic disaster. "
"China, the biggest brake on global inflation for two decades, is embracing wage increases that threaten to erode retailers’ margins and demand for bonds. "
"Given China's burgeoning ranks of smokers, the tobacco business has been hugely lucrative for Beijing, with annual profits up almost 20 percent every year for the past five years."
Chinese provinces are investing at a much higher rate than they were supposed to have. The economy is still reliant on investment, not consumer spending.
Perhaps a better measure would be per-capita GDP. But as Arthur Kroeber correctly notes in the article that China can no longer hide behind its undeveloped status quite so easily. India, on the other hand...
The WSJ looks at the recent disclosure that China has become the world's second largest economy and puts it all into perspective. It is a milestone, but not one either Japan or China is celebrating.
A US Foreign Policy for the Age of Economic Power
What population growth and decline means for the global economy
As China takes its place as the world’s second superpower, America needs to understand it better in order to ensure peace and to take advantage of business opportunities. Too often politically charged rhetoric and ill-informed people are shaping American public opinion towards China. The reality is that China has played a critical role in helping the world’s economy recover from the financial crisis and is making great strides in protecting intellectual property and promoting more gender equality.
But local governments have set higher growth targets, according to a must-read analysis in Caixin. Ten provinces have plans to double their economic output by 2015, which is equivalent to 15 percent yearly growth.
Read more: http://www.businessinsider.com/chinese-local-governments-fight-to-the-death-overheating-2011-2#ixzz1DdkOR1ca
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