Opinion

The Great Debate

Economic stimulus Beijing-style: I treat, you pay

wei_gu_debate– Wei Gu is a Reuters columnist. The opinions expressed are her own. –

Beijing may criticize American consumers for spending money they do not have, but the truth is Chinese leaders do the same, they just make sure it doesn’t end up on their account.

In its $585 billion economic stimulus package, the central government is contributing just a quarter of the funds needed, leaving the rest of the tab to banks, local governments and the private sector.

By comparison, the U.S. Treasury is expected to fund all of America’s $787 billion economic recovery plan by incurring more debt through the issuance of Treasury bills.

But just like in the West, there’s no such thing as a free lunch.

The Chinese central government might have successfully transferred most of the risks and financing costs to banks and local governments from its own balance sheet, but if bad debt piles up the chickens will still come home to roost in Beijing.

Advancing global Internet freedom

Leslie Harris – Leslie Harris is the president and CEO of the Center for Democracy and Technology in Washington, DC. The views expressed are her own. —

In the wake of troubling reports as recently as last year that Western companies were assisting China with Internet censorship and the unmasking of cyber-dissidents, governments around the world seemed poised to regulate the conduct of Internet companies. Lawmakers appear to have stepped back from those efforts, but the challenges of advancing global Internet freedom remain.

The Global Online Freedom Act, drafted in the U.S. Congress, would have made it a crime for Internet companies to turn over personal information to governments in cases where that information could be used to punish dissent. The bill produced a firestorm of controversy. Human rights groups campaigned for swift passage, while the tech industry scrambled to stop the bill, which they viewed as a global eviction order from many difficult but emerging markets. At the same time, several members of the European Parliament proposed a European version of the measure, taking the accompanying controversy global.

First 100 Days: Obama’s foreign policy challenges

Willis Sparks– Willis Sparks is a Global Macro analyst at the political risk consulting firm Eurasia Group. The views expressed are his own. –

Few things in life amused my dad more than a good karate movie. I once asked what he found so funny about Bruce Lee’s jaw-dropping display of poise and power. “Nice of the bad guys to attack him one at a time,” he said. In the real world, threats don’t arrive single-file, like jets lining up for takeoff.

President Barack Obama’s toughest foreign-policy challenge will be in managing the sheer number of complex problems he’s inherited and their refusal to arrive in orderly fashion. In addition, the still-metastasizing global financial crisis will exacerbate several of these problems, by depriving a number of governments of the funding they need to maintain social stability and to meet internal and external threats to their security.

from Africa News blog:

Time to stop aid for Africa?

Far from being all bad news for Africa, the global financial crisis is a chance to break a dependence on development aid that has kept it in poverty, argues Zambian economist Dambisa Moyo, who has just published a new book “Dead Aid”.

Moyo’s book, her first, comes out at a time when Western campaigners, financial institutions and some African governments have been warning of the danger posed to Africa by the crisis and calling for more money from developed countries as a result. The former World Bank and Goldman Sachs economist spoke to Reuters in London.

“I’m not saying its going to be easy, I’m just saying that there is a real opportunity for policymakers to focus on coming up with more innovative ways of financing economic development. In a way the crisis actually provides the African governments with the situation where they cannot rely on aid budgets coming through from the West.”

China Inc. takes stock after overseas buying spree

wei_gu_debate– Wei Gu is a Reuters columnist. The opinions expressed are her own –

Abundant liquidity, government support and a strong yuan fueled Chinese companies’ overseas buying spree.

But since they went out at the peak of the market and did not have a clear strategy for acquisitions, it should come as no surprise that most of those deals have turned sour. Once bitten, twice shy.

First 100 Days: Manufacturing a dream and a recovery

Scott_Paul– Scott Paul is executive director of the Alliance for American Manufacturing (AAM), a labor-management partnership of several leading U.S. manufacturers and the United Steelworkers. The views expressed are his own. —

Barack Obama knows the story of American manufacturing firsthand. He cut his political teeth as a community organizer on the South Side of Chicago in the shadow of shuttered steel mills, working to salvage hopes and dreams that had been crushed by the weight of layoffs and economic decline. As President, he can authoritatively recall America’s industrial heritage and decline, but more importantly, Obama can lead the nation to a renaissance in American manufacturing.

Manufacturing has boosted the American economy, jobs, and wages for generations dating back to World War II. Recently, it has fallen on very hard times. Nearly one in four manufacturing jobs has vanished since 2000, and 40,000 factories have closed since 1998. Last year, manufacturing accounted for nearly a third of all lost jobs in the U.S., while factory orders plummeted to record lows.

Global imbalances and the Triffin dilemma

John Kemp Great Debate– John Kemp is a Reuters columnist. The opinions expressed are his own –

For the world monetary system, the financial crisis which erupted in the summer of 2007 is a cataclysmic shift that will prove every bit as significant as the outbreak of the First World War (which heralded sterling’s demise as a reserve currency) and the suspension of gold convertibility in 1971 (which marked the end of bullion’s monetary role).

The crisis marks the passing of an era in which the U.S. dollar has been the world’s undisputed reserve currency for making international payments and storing wealth.

Downturn hits China’s manufacturing heartland

John Kemp Great Debate– John Kemp is a Reuters columnist. The views expressed are his own –

The global slowdown is hitting China’s modern manufacturing base in Guangdong province especially hard. Deputy governor Huang Longyun on Thursday warned a news conference “the situation is grim” and the manufacturing hub around Pearl River Delta is bearing the brunt of China’s slowdown.

Guangdong’s burgeoning factories have supplied most of the cheap manufactured items flooding world markets in the last five years. They have also been the source of most of the marginal demand for crude oil, refined products and other raw materials. The province’s slowdown will therefore have profound effects on global markets and prices in 2009.

China’s growth obsession may spawn jobless upturn

Wei Gu – Wei Gu is a Reuters columnist. The opinions expressed are her own –

China is pulling all the stops to keep the economy growing by at least 8 percent, a pace considered necessary to absorb millions of migrant workers and graduates that hit the job market every year.

Ironically, with all its attention focused on the vigorous “defense of the eight”, Beijing risks losing sight of its ultimate goal — creating enough jobs to preserve social peace — and may end up engineering a jobless recovery.

Finance throws sand in wheels of trade

James Saft Great Debate – James Saft is a Reuters columnist. The opinions expressed are his own. –

Trade finance, a basic lubricant for the global economy, is becoming much more expensive and tougher to get, accelerating an already harrowing downturn.

Banks are reluctant to allocate scarce capital to trade finance, which funds cross-border buying and selling, and are very wary about being caught short by defaults by other banks which write letters of credit or by the importers and exporters themselves.

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