The Gold Standard  

Good friend Ramnarayan in the US has sent several recent articles that appeared in various media sources, on China. Collectively, they do not make us any wiser or better informed about China. At most, we can say that they reflect the world’s anxiety about China’s rise and how it would behave. It does not exclude India.

Here are the various articles, links and some quick comments from my side. Finally, not to miss out on this, I share portions of my own thoughts from an email I penned to a colleague yesterday on China.

Looks like this is an editorial in ‘Washington Post’.  Its message is forthright. It wants Obama to prick the China bubble. I am not sure that Americans are that adept in pricking bubbles.  They allow bubbles to run their course. When they pop, they step in to mop up.

Peter Brown, writing for Asia Times is consoling himself by discussing the new military technology that the US might unveil later this decade.

This Leader in ‘Economist’ calls upon America to stand tough on issues like meeting Dalai Lama, on arms sale to Taiwan, etc. but to be less strident on trade and economics. It says that China ’should be encouraged to play its part on climate change, on Iran and by allowing its currency to appreciate’.

Now, how exactly would the world encourage/cajole/coerce China? No one has the answer. The West has tried all three, I think. They have not found one approach that elicits a consistent response. How does ‘Economist’ think that playing hardball on non-economics and softball on economic matters would ‘encourage’ China to do all that it says?

These muddled recommendations are echoed by Kanti Bajpai in his piece titled, ‘Stumbling tiger, leaping dragon’ for Times of India. I doubt if India’s foreign policy mandarins would have had their ‘eureka’ moment after reading that piece.

Mr. Bajpai knows geometric progression for sure. But, he has not read, I suspect, Niall Ferguson’s interview to be wary of the ‘BRIC future of Goldman Sachs’.  Niall said that there were multiple futures. Mr. Bajpai’s piece seems to suggest that there is only one in which China grows at 10-12% and India grows at 6-8% per annum. Needless and baseless growth differential projected far into the future.

Interesting to note is his reference to Prem Shankar Jha’s book on China. I have not read that. But, Mr. Jha has apparently observed that China has a better appreciation of its challenges. That is credible. I had alluded to that in my MINT piece.

There is a news article from ‘Financial Times’ on Beijing’s dismissal of US call for a revaluation of the Renminbi. Sometimes, I have wondered if the US actually wants China to continue to stick to its mercantilist approach, either because it would cause China to self-destruct [because such a policy creates periodic booms and busts in the economy, every time weakening its core foundations] or because American firms would lose out if the currency is revalued.

I think China would pretty much decide to move faster on this if it is able to reduce its reliance on export growth. For China to figure that out confidently would take another three years at a minimum. Until then, any progress on the exchange rate would be glacial. Further, by any chance, if it lent money to Greece, then the world could stop speculating on when the renminbi would be revalued.  Then, the answer would unequivocally be when China wanted it.

This article from ‘Economist’ would be useful to some of its readers as it highlights the personalities who run China’s financial systems and those that don’t.

For good measure,  good friend Sushant sent me this rather long ( like mine) blog post. It is at least a two-faced article. In the guise of a balanced prose, it basically asks Americans to accept greater stridency from the Politburo.  It tries to cleverly disguise its message. But it is not that difficult to see through it.

At work, this is the piece that a colleague sent me and sought my views.  Looks like Gordon Chang, the famous author of ‘The coming collapse of China’ is a prolific author. His prediction has not materialized yet. It may yet but again, it may not. There is no law of limitation to such forecasts. This is the article my colleague sent me.  It has also appeared here.

I will reserve the rest for Part 2.