Changing China

How big a gamble will China take on Europe?

By Scott Boyd The views expressed are his own.

As news broke this month suggesting it was more likely than ever that Greece was headed for default, China extended an offer of assistance that beleaguered European governments may find difficult to refuse. Premier Wen Jiabao announced that China was willing to increase its holdings of European sovereign debt at a time when several Eurozone countries are struggling to raise capital.

In return, China seeks little–simply an assurance that profligate governments promise to get their financial affairs in order, and perhaps some other small favor that, in the words of Premier Wen Jiabao, “would reflect our friendship.” The Premier even suggested that a good way to demonstrate this new-found goodwill would be to support China’s bid to be reclassified as a “market economy” by the World Trade Organization.

Currently, anti-dumping tariffs are applied against products shipped from China that are deemed to be sold at below the true market cost. This is an attempt to counter the subsidies and other incentives the Chinese government provides to many manufacturers to ensure their competitiveness; a change in designation would remove most of these tariffs.

While lower costs may be good news for consumers, for European manufacturers, it could prove disastrous. Disadvantaging European manufacturers already facing weak domestic demand could lead to wider job losses and a further slowing of the economy. Eurozone officials would be well advised to consider carefully the potential impact on domestic manufacturers before agreeing to easing China’s access to the European markets.

Either way, change will come within a few years, as China is slated to be re-designated as a market economy in 2016. Nevertheless, there is a very good reason why Beijing is trying to move the date forward – each year China comes under increased competition from other emerging economies.

China’s ability to undercut other production centers has proven remarkably profitable, but outside events are forcing China to update its approach. By deliberately undervaluing its currency, China has created a massive trade surplus with its export markets which has resulted in the loss of manufacturing jobs in both the U.S. and Europe. These job losses have contributed to slower economic growth in Western economies, leading inevitably to an overall decline in consumer spending and, by extension, lower demand for China’s exports.

from MacroScope:

Will China make the world green?

Joschka Fischer was never one to mince words when he was Germany's foreign minister in the late '90s and early noughts. So it is not overly surprising that he has painted a picture in a new post of a world with only two powers -- the United States and China -- and an ineffective and divided Europe on the sidelines.

More controversial, however, is his view that China will not only grow into the world's most important market over the coming years, but will determine what the world produces and consumes -- and that that will be green.

Fischer, who was leader of  Germany's Green Party, reckons that due to its sheer size and needed GDP growth, China will have to pursue a green economy. Without that, he writes in his Project Syndicate post, China will quickly reach limits to growth with disastrous ecological and, as a result, political consequences.

This will have serious consequences on the the way the West lives.

Consider the transition from the traditional automobile to electric transport. Despite European illusions to the contrary, this will be decided in China, not in the West. All that will be decided by the West’s globally dominant automobile industry is whether it will adapt and have a chance to survive or go the way of other old Western industries: to the developing world.

This is not the usual view of China. Many greens have long feared the impact of a huge leap in Chinese growth on the global environment -- refrigerators in a billion homes, cars in a billion garages etc.

from Africa News blog:

Did Dalai Lama ban make sense?

Organisers have postponed a conference of Nobel peace laureates in South Africa after the government denied a visa to Tibet's spiritual leader the Dalai Lama, who won the prize in 1989 - five years after South Africa’s Archbishop Desmond Tutu won his and four years before Nelson Mandela and F.W. de Klerk won theirs for their roles in ending the racist apartheid regime.

Although local media said the visa ban followed pressure from China, an increasingly important investor and trade partner, the government said it had not been influenced by Beijing and that the Dalai Lama's presence was just not in South Africa's best interest at the moment.

The conference, ahead of the 2010 World Cup, had been due to discuss how to use soccer to fight xenophobia and racism.

"We stand by our decision. Nothing is going to change. The Dalai Lama will not be invited to South Africa. We will not give him a visa between now and the World Cup," said government spokesman Thabo Masebe.

Whatever the reasoning, it angered the Nobel laureates in a country which has prided itself as a model of democracy and human rights since the end of apartheid in 1994.

Nelson Mandela’s grandson, Mandla, one of the conference organisers said the rejection was tainting South Africa’s democratic credentials.

"The government needs to review its decision and come to the party," said Mandela, set to become a parliamentarian with the ruling African National Congress after the election in April.