It is interesting how much advice non-Chinese experts have for China.
And its understandable - after all, China does seem to be the robust tractor, and the most likely to pull other economies out of the mire. And if we can help, then we should.
But do we understand the questions, never mind the answers, which exercise Chinese behaviour, policy and development?
It is all very confusing - look at this graphic - which highlights how the most populous single country has suddenly become a nation of urban, middle-aged people!
And this one, which highlights how these damn Chinese just save and save, and won't borrow, like any self-respecting Westerner would!
To me, pictures like these tell me that recent (post WW2) US/Euro thinking is unlikely to "get" the China story.
Among the possible ways to get China to avoid a bubble and into a sustainable, credible boom for our economies to service and leverage off, these are posed by the team at www.breakingviews.com :-
"Beijing will have to cut saving and boost consumption. There are four main ways to do this
First, push up wages. The snag is that wage inflation is already chipping away at China's competitiveness – and Beijing is scared about what will happen if the economy can't create the millions of jobs that are needed each year to absorb new migrants from the villages to the cities....
Second, allow the exchange rate to appreciate. But again, it would undermine competitiveness....
Third, give the people a better deal on tax and social security, so that they wouldn't need to save so much themselves....
Finally, give the people a better deal on their savings. At present, savers get a negative inflation-adjusted interest rate of around 2 percent...."
Doesn't tabling that third notion just blow your mind, after watching exactly that approach take the large Western countries into trouble? Anyway, to see more about the Breakingviews team's work, read http://www.breakingviews.com/Info/~/media/Images/Books/CHINA.ashx - its certainly worth the effort.
Cheers
Stuart
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