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Andy Xie’s Blunt No To Eurozone Bailout

[Editor’s note: this post is of course in response to the recent barrage of articles in the U.S. and U.K. scoffing at the idea that European leaders may be looking at China to ‘save’ Greece. For example, here, Huffington Post writes, “China As Savior or Predator in Europe?” Does such narrative even make sense? China is really the innocent bystander, but now we all are supposed to think in terms of her being the ‘savior’ or ‘predator’?]

http://blogs.ft.com/beyond-brics/2011/11/02/andy-xie-china-shouldnt-aid-eurozone/#axzz1cYUBYdWU

Andy Xie’s 5 reasons why China should not bail out Eurozone.

Should China assist the eurozone in its hour of need? Yes, says the European Union which has gone to Beijing cap in hand. Perhaps, says China, mindful of the global effects of the crisis in its biggest trading partner. No, says independent economist Andy Xie.

In a note on Wednesday, Xie, a Shanghai-based consultant and writer, says bluntly that “it is not in China’s interest to participate in any European bailout scheme”, especially after Greece’s sudden announcement of a referendum. “The abrupt change [in Athens]  and deepening uncertainty are warnings against any China’s involvement in European affairs,”  says Xie.

Xie gives five reasons for China keeping its purse shut (with commentary from beyondbrics in italics):

First, “it won’t return well financially”.  As earlier investments in Blackstone, Morgan Stanley, and Rio Tinto show, “China’s state-owned financial system doesn’t possess the capability to choose and execute foreign investments well.”

This doesn’t follow.  Support for the eurozone rescue would probably involve Beijing buying bonds issued by the EU’s European Financial Stability Facility or by a special vehicle run jointly by the EFSF and the International Monetary Fund. AAA-rated and low-risk instruments, quite different from putting money into Morgan Stanley.

Second, “Europe won’t reward China politically for its assistance. Europe doesn’t treat China well.”  Even though big European companies make big profits in China, European media and politic are negative towards China, complaining of losing jobs to it. “As Europe’s crisis deepens, it seems to have become more negative towards China. Indeed, China’s assistance would spark more fears towards China. It will probably [prompt a] backlash against China.”

It’s true that many Europeans are suspicious of China. But would a rescue bring a “backlash”? Hard to say. Not participating might be worse as mainstream EU leaders would then be freer to bash China.

Third, “China’s assistance would mainly weaken Germany’s position in Europe. [And] It inadvertently drags China into European politics. ”

Unclear how Chinese assistance would weaken Germany. Germany has staked much on this rescue. Failure would damage Angela Merkel, the German government, German banks and the German economy.

Fourth, “it’s not fair to Chinese people to aid Europe. Chinese people work much harder than Europeans and are paid one tenth as much. It is morally wrong for China to aid such people. And these people are so negative about Chinese. It just doesn’t make sense.”

Dead right. Beijing’s big political challenge, if it goes ahead, will be securing the support of their hard-working people. While China’s not a democracy, public opinion matters.

Fifth, “Europe has enough resources to solve its problem.” Greece’s total debt is €350 bn, compared to over €8,000bn in the eurozone’s GDP. The eurozone is roughly balanced in international trade. “It is a money distribution problem within. In terms of fiscal deficits, by Asian standard, the cuttings required are relatively small. What Asian economies did after the Asian Financial Crisis were several times as big. It just doesn’t make sense for others to help Europeans when they could help themselves.”

Dead right again. But reform of Europe is a medium- to long-term challenge. The rescue is required right now – it should buy time for reform.

Xie then lists three ways how China can “help the world and Europe” by doing things at home.

First, start the  international board of its stock exchange as soon as possible – so global companies can raise money in China and China has a safe export route for its capital.

Second, China cut taxes to boost consumption, along with tolls and transport charges. The government would see its revenues fall but the benefits would go the the private sector good.

Finally, in the longer term, “China must focus on increasing technology content and quality of its industrial sector” by climbing the value chain,

These are all good ideas. But none – except perhaps big tax cuts – would have an immediate impact on China let alone the world economy.

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  1. November 2nd, 2011 at 07:44 | #1

    I agree with a lot of what Andy Xie says here. The idea of the EU going cap-in-hand to China “because it’s China’s interests to help us out” is grotesque.

    It is silly for Slovaks, Poles, and Czechs who do not receive half the benefits that Greeks do to loan Greece money so that the Greeks can avoid harsh but necessary austerity measures. It is even worse that a relatively poor nation like China should bail out the Euro-Zone, whose problems are largely self-inflicted, merely so that Merkozy can avoid having to raise revenue to cover the bail-out.

    The Euro was an experiment that many warned against but which was undertaken for largely ideological reasons. It was seen as good by people in some quarters because it was a stepping-stone on the road to a federal Europe. It is not in Chinese interests to rescue such a project – either politically or economically. This is doubly the case when countries more interested in the European continent that China (e.g., the UK) have already indicated that they will not take part in any bailout (excepting their involvement with the IMF), and when Greece is likely to be followed by Italy, with bailout being followed by bailout.

    The idea that China should rescue the Eurozone from having to implement unpopular but necessary measures is yet another example of the kind of quick-fix thinking that landed the Eurozone in its current predicament.

  2. November 2nd, 2011 at 14:47 | #2

    I’m agreeing with FOARP for once! Mostly.

    The creation of the Eurozone was, to my mind, a mistake (one which the UK should by all means continue avoiding), but I don’t accept as glibly the need for ‘austerity measures’ in Greece when a pittance of a tax on the all but free-riding wealthy of that country would do just as well.

    Some fairly good reading on the issue:

    http://www.nakedcapitalism.com/2011/10/marshall-auerback-and-rob-parenteau-the-myth-of-greek-profligacy-the-faith-based-economics-of-the-%E2%80%98troika%E2%80%99.html

  3. raventhorn
    November 2nd, 2011 at 14:51 | #3

    Some may quickly forget, that China learned a lesson from 1997.

    What should we draw from 1997? (1) China acted primarily out of self-interests, but (2) What was good for China in 1997 was also good for China’s neighbors and the World in general.

    This time, China again must learn to avoid the pleadings and pressures from outside, and do what is in its own BEST interests. Only a strong and viable China would be good for the rest of the world. China cannot save others by digging holes in its own pockets.

    http://chineseculture.about.com/od/thechinesegovernment/a/Chinaeconomy.htm

    Lessons from the 1997 Asian Financial Crisis

    China had a similar, though much smaller package passed during the 1997 Asian financial Crisis, where it spent large sums to build up its domestic road system to keep the economy growing.

    China was able to remain relatively unscathed from the 1997 crisis while many of its neighbors fell into a recession. Because Chinese investments didn’t center on securities, the country was also relatively insulated.

    The crisis also forced China to look at fixing the many of its financial weaknesses such as its many non-performing loans, it’s antiquated banking system, and its reliance on U.S. trade.

    During the crisis, China also chose not to devalue its currency, allowing for an anchor of stability, which aided the recovery of its neighbors. The Chinese currency had a fixed exchange rate that was tied to the U.S. dollar for many years.

    In 2005, the peg was lifted and the yuan was now subject to a managed floating exchange rate based on supply and demand, within certain limits. Some nations have argued that it has not been devalued enough.

  4. November 2nd, 2011 at 16:21 | #4

    I think viewing China’s actions towards Greece’s possible default in terms of ‘help’ is kind of wrong-headed. That’s more the media narrative which makes for everything more dramatic.

    China has a big stash of cash for which she needs to find investment vehicles. If there is a win-win on all parties concerned, then so be it.

    If I would to guess, the Chinese leaders probably tell the Europeans in their private negotiations to take their ‘human rights’ nonsense and shove it. U.S. and E.U.’s message of ‘human rights’ in China are crocodile tears (to borrow melektaus’ analogy). U.S. and E.U. never ‘win’ in the U.N. in politically motivated ‘human rights’ issues anyways.

    The West uses ‘human rights,’ ‘democracy,’ and ‘freedom’ as a core foreign policy ideology to justify domestically for foreign intervention. The West will not abandon this because China spent $100 billion. $100 trillion and perhaps they might reconsider, but China ain’t got that much.

  5. November 2nd, 2011 at 16:54 | #5

    I think the CCP will be looking to invest heavily in Africa’s nations and other developing nations and its investment opportunities in Europe (including a potential bailout) will be seen as secondary.

  6. kchew
    November 2nd, 2011 at 17:36 | #6

    There is no such thing as free lunch. I agree very much with what the writer Jian Junbo wrote in Asia Times:

    http://www.atimes.com/atimes/China/MK03Ad02.html

    Excerpts …

    The limitation of Beijing’s help is also influenced by political factors. If Brussels asks Beijing to actively engage in the resolution of debt crisis on the one hand, yet on the other hand continuously ignores Beijing’s demands for EU recognition of China’s status as a full market economy, and for easing its restrictions on high-tech exports and lifting its embargo on arms sales to China, why should Beijing meet Europe’s demands?

    Although it is in China’s interest to see a stable and strong EU market supported by a stable euro, China is making efforts to reduce exports by stimulating domestic consumption. In other words, China could still sustain its own development while suffering setbacks in foreign trade and investment.

    And another important, if not the most primary, factor is Chinese people’s response. Many people in China don’t want the government to invest too much in euro assets, because they think it’s unreasonable for a developing country to help the developed world. ”Why should those who eat porridge and pickles be asked to help those who enjoy steak and drink French wine?” some netizens asked. ”Many Chinese people need money to make a living, why should the government take such hard-earned money by Chinese to feed those foreigners?” another questioned. And some one said ”They have money to support wars (such as in Iraq and Libya). Why don’t they have money to deal with their own financial crisis?”

    Domestic opposition to China’s support for European debt crisis-resolving will put some pressure on Beijing’s leaders. They also should listen to voices from civil society who supports the political legitimacy of the Chinese Communist Party’s (CCP) rule.

    There is a Chinese saying, ”To give a plum in return for a peach”. An English idiom also has it that ”There is no such thing as free lunch”. So if China offers financial aid to the EU, what can the EU give China in return?

  7. raventhorn
    November 2nd, 2011 at 18:12 | #7

    NPR read some public comments, including 1 comment that stated,

    “China got a free ride on the world and didn’t give any thing other than cheap labor”.

    Odd, I thought. Sounds like the World got a cheap ride on cheap Chinese labor. Where is China’s “free ride”?

    This is the sort of idiotic logic that defines the new age of bigotry against China and her People.

    Chinese work hard for less pay, and that’s a “free ride”?!

    OK, the “free ride” is over, and let’s see who’s actually paddling the boat.

  8. zack
    November 2nd, 2011 at 19:20 | #8

    i’m fine with Beijing bailing out the eurozone so long as China gets something worth her while. Like lifting the EU arms embargo, opening more markets for Chinese goods and companies, sitting down and shutting the fuck up about “human rights” (trademarked), aiding China in international fora, and also, for France to tell their puppets in Libya to restore Chinese contracts and oil rights. The last ought to be a given anyhow as an act of good faith.

    else it’s bye bye eurozone and europeans’ hopes and dreams of continued relevance in the 21st century.

  9. raffiaflower
    November 2nd, 2011 at 20:40 | #9

    Zack,I think they just want China to hand the dough over and stfu up. Dare China ask for even a small concession, be assured it will be leaked to media and it will be demonised as a vulture circling around poor, stricken EU.
    China should take the layman approach: if an acquaintance you don’t really trust asks you to loan $10, you loan $1, expecting not to get it back anyways. This is a likely scenario: good $$ down the drain, to someone who doesn’t like you and thinks you are a pushover.
    The Chinese govt should also turn the tables on EU with the reminder that – while it is unelected – it must heed vox populi, which is of the opinion that a poor country (by head count) should not bail out rich ones. Ouch.
    It’s like the drunken lord of the manor not only asking servants to pick up after a wild party, but also to foot the bill for damage and abusing them verbally as well. Or what Japanese people say about the US and themselves in the 1980s: the Japanese work and live in rabbit hutches so that the Americans have big swimming pools and drive big automobiles. Ridiculous.
    Let France and England, who bombed and killed Libyans in order to give them a better life, bail their own affiliates out.

  10. silentvoice
    November 2nd, 2011 at 21:35 | #10

    Well, China needs to diversify investments from the US Dollar anyways, so buying more Euros may be a way to do it.

    Additionally, since Raventhorn brought up the Asian Financial Crisis, let’s not forget that China’s helpful attitude during that crisis reaped a lot of benefits for her afterward. It reduced suspicion from SEA nations and enabled China to leapfrog over Japan as the undisputed trade leader of SEA. Formerly anti communists governments from Malaysia to Indonesia became pro-China which helped China secure participation in the ASEAN grouping.

    Another important point is China must look beyond economic benefits and disagreements with EU over human rights. I’ve been reading a few of the China military watch blogs and the general consensus is that China is still not strong enough to stand on its own militarily. Her jet aircraft is one generation behind the West, the country has no indigenous AWACS, her C4SIR integration is suspect, and as far back as 10 years ago China was still using air and sea defense tactics the soviets used in the 60s. Rumors have it that China’s airforce was beaten soundly by the Pakistani and Turkish (NATO) air forces in a recent joint exercise. All said, China could really benefit from the lift in arms embargo and greater interaction with EU countries. The 闭门造车 approach does not work.

  11. zack
    November 2nd, 2011 at 22:03 | #11

    @raffiaflower
    the europeans can whine and moan all they like; time’s on China’s side-it’s not their currency that’s going belly up if they don’t get a bailout. It’ll be especially damaging for either France or Germany, the twin heads of the EU project; heck, none of the other BRICS have the capacity or funds to bail out the europeans; China could do it but as has been said previously, it is money belonging to the Chinese ppl and naturally the Chinese ppl and their leaders want something tangible from their investment.

    Lifting the arms embargo and recognising China’s market economy status would go farther in demonstrating that the Europeans truly do see China as an equal.
    The analogy of the drunk lord of the manor isn’t apt;) China doesn’t work for the europeans, and the europeans certainly aren’t masters of the Chinese. France and the UK have money to spend on combat ops in Libya yet they don’t have money to spend on their own economy? the logic of entitlement is even more twisted than Americans using the euphemism of “balancing the global economy” when they really mean “China should’ve been buying up our own useless crap than saving it up! how dare these Chinese ppl save their money? yes, we have the right to tell Chinese who live a spartan existence, what to do with their money.

    Or what’s in vogue this season is “waah, waah, our companies can’t compete with Chinese companies in a free trade environment so please, mummy and daddy Congress, make the Chinese pay tariffs for their products!”
    can’t compete? not willing to adapt?
    they deserve to fail.

  12. xian
    November 2nd, 2011 at 22:06 | #12

    It’s unlikely they’ll lift the arms embargo for any reason though, which brings it back to the main point – what would China gain from this? Probably nothing. In fact, I think Andy Xie is right, it would actually serve only to make Europeans more wary of Chinese influence on their turf, and therefore even more anti-China.

  13. Charles Liu
    November 2nd, 2011 at 22:36 | #13

    China is EU’s biggest trading partner. Perhaps helping them out is in China’s interest.

    The political stuff will really depends on how the negotiation goes. I’d tends think the days of the Madarin signing treaties at gun point is over.

  14. zack
    November 2nd, 2011 at 22:42 | #14

    if the european powers had carriers, i see no reason why they wouldn’t park them in the Yellow Sea or the South China Sea to pressure the Chinese to react; the Americans have certainly done it, especially with military exercises.

  15. November 2nd, 2011 at 23:21 | #15

    @Zack – the UK, France, Italy, and Spain all operate aircraft carriers of one kind or another.

  16. zack
    November 2nd, 2011 at 23:40 | #16

    @FOARP
    yet all are divided; the UK appear not to care much for the EU (nor do they have fighters for their new carriers, since they were supposed to be crewed by F-35s) and if the french could use an opportunity such as the Americans did, of teaching north korea a lesson, they would have, but to do so now would be too overt. Besides, the French desire very much for the EU project to stay intact and in that respect the Chinese have them by the short and curlies. The Americans have yet to wake up to the fact that they are no longer sole superpower

  17. kchew
    November 2nd, 2011 at 23:45 | #17

    @silentvoice,
    China should diversify its foreign holding – thats given. However, it is another matter to give financial aids to appease the arrogant Europeans while getting almost nothing but scorn in return. Gone are the days of European gunboat diplomacy with respect to China.

    China’s military is not as toothless as you seem to believe. Certain military web sites and writers seem to have a habit of looking down on Chinese military advancement and are prone to run rumours of Chinese military being beaten in air exercises. Take them with a grain of salt.

    The military advancement in last 10 years has been tremendous, such that the gap is getting increasingly smaller every year. Despite the arms embargo, China military is able to develop fast on its own due to large amount of money being poured into scientific and technological reseaches. Buying overseas arms actually slows down China indigenous weapons developments.

  18. raventhorn
    November 3rd, 2011 at 06:44 | #18

    I would suggest that China considers what it did during the Asian Currency Crisis, that being, peg its currency against the most stable currency out there, the US dollar.

    If the Eurozone is in danger of collapse, China shouldn’t peg the Yuan against the Euro, (should probably remove the Euro from the basket of peg).

    But the dollar is not that stable either, so China should consider pegging the Yuan against perhaps some other basket of currencies, perhaps, the Korean Won, the Japanese Yen, the Brazilian currency, and perhaps the Australian Dollar.

    That would be the more sensible diversification move.

  19. November 3rd, 2011 at 07:38 | #19

    @silentvoice
    I agree with kchew. Most rumour about the PLA, even “highly regarded” site like RAND has nothing but hear say infomation. Regarding Chinese Flankers being beaten, we have to take it with a pinch of salt. As during Indian’s Flankers training with USAF, the Flankers were able to beat the F-15. The Chinese AF has advanced pilots exchange with the Israeli AF so I don’t believe they are beaten flying superior aircraft vs older generation F-16.

    The Chinese AWACS system KJ-2000 is all homegrown, except the airframe which is Russian IL-76. China currently does not make transport over 100 ton. The original AWACS was supposed to come from Israel but was cancelled due to US pressure.

    However, the fact is half of China’s fighter force is the J-7 and J-8 which are pretty old. So whenever I hear people saying China’s military’s budget are under reported by a factor of 2-3 I have to laugh. The Chinese navy is also only 1/3 modern. Take this into consideration, US’s defence budget = $700 billion, EU = $300 billion, China =$100 billion. China’s budget was just $50 billion 10 yrs ago.

  20. November 3rd, 2011 at 07:43 | #20
  21. silentvoice
    November 3rd, 2011 at 08:25 | #21

    Ray :
    However, the fact is half of China’s fighter force is the J-7 and J-8 which are pretty old. So whenever I hear people saying China’s military’s budget are under reported by a factor of 2-3 I have to laugh. The Chinese navy is also only 1/3 modern. Take this into consideration, US’s defence budget = $700 billion, EU = $300 billion, China =$100 billion. China’s budget was just $50 billion 10 yrs ago.

    Which is why more friends wouldn’t hurt. Remember, there is no chance that the US will aid China in ANY way. China is practically in the same position the Soviets were militarily and technologically, i.e. being ‘contained’ by the entire Western world. While I don’t know if China could extract any kind of good will by helping EU this time around, rejecting them when they’ve come cap in hand, would not help China’s case.

    In 10 or 20 years time, when China has caught up not just economically but also militarily, she can play hard ball. At the moment, she shouldn’t be afraid to lose out a bit.

    (I don’t want to digress too much, but Ray, it’s not just the hardware, but the ‘software’ in terms of air and fleet tactics too. Alot can be learned from regular exercises with NATO nations, for example. Not to mention building mutual trust which would go a long way in defusing a crisis situation.)

  22. pug_ster
    November 3rd, 2011 at 08:36 | #22

    The Eurozone is going to collapse and if China is footing its money, it will simply delay it. China should allow the Eurozone to collapse, many European countries break away from the Euro and China can probably get favorable investment conditions to the individual countries with Chinese investments.

  23. raventhorn
    November 3rd, 2011 at 08:38 | #23

    @silentvoice

    There are quite a bit of development of Chinese asymmetric warfare forces that really makes Western planners very nervous.

    For example, http://english.people.com.cn/200705/30/eng20070530_379205.html

    “Anjian” (Dark Sword) Unmanned Stealth Fighter Drone.

    Chinese Drone development is increasing rapidly, and expanding shares in the global arms market.

    It plays well to China’s strength: Cheap manufacturing cost, rapid product development cycle from prototype to mass production.

    The most feared scenario in the Western military planners, is a China that is cranking out Millions of disposable combat drones and robots, as 1st line defense and assault forces.

  24. raffiaflower
    November 3rd, 2011 at 09:32 | #24

    `Rejecting them when they’ve come cap in hand, would not help China’s case”.
    Precisely the point. As a full-grown world power, China can’t just turn its back on the mess, partly out of self-interest and also keeping up the facade of global bonhomie. But if there’s no pay-off for helping out, China should toss a few coins and cop out on the excuse that it must bow to public pressure @ home.
    No, Charles, the CCP mandarins cannot be forced at gunpoint to bail out the political and banking fraudsters of EU. But neither can China project the military power to defend its investments, the way that Britain did in the 19th century.
    Not that it must come to war. But wielding a big stick enables someone to speak softly and still be heard with respect. It also attracts and re-assures allies, to do your bidding in the safe knowledge that they are protected and rewarded.
    The US is still able to project its strength through its network of friends and proxies. As the columnist Robert Kaplan notes, in a potential American strategy against China: “We will leave the heavy lifting to our allies.’
    A relatively weak China is unable to protect its investments abroad, including Nato-land. The Chinese government needs to proceed with extreme caution, if it doesn’t want 30 years of hard work by the people to go down the drain.
    Besides, the European crisis is likely to divide EU, which is to China’s advantage. As the saying goes: in every crisis, there is an opportunity.

  25. Charles Liu
    November 3rd, 2011 at 09:49 | #25

    @kchew “China’s military is not as toothless as you seem to believe.”

    Good to know, but probably best to never find out IMHO. The military gap is shrinking, but still a gap none the less. According to some wonks, China’s ICBM are effectively mothballed, with warheads secured off-site (because the generals are more worried about mis-firing than actually using it.)

    Compare this with what US does. We routinely send out nuclear subs loaded with active nuclear missiles off to the Pacific on 3 month non-specific patrols, just in case we need to wipe somebody out. I’ve seen this, what I would truly call WMD, leaving Bangor Submarine Base, headed towards China.

    @pug_ster “China should allow the Eurozone to collapse”

    Political strife in Europe had caused two world wars. It won’t be good times for China if WWIII breaks out.

  26. November 3rd, 2011 at 10:10 | #26

    My predication:

    * Euro will be dissolved or will at least kick out the cheaters, free loaders and parasites like Greece.

    * After that, default is not a bad answer.

    * The lesson of having a good life without working hard is learned again and again. First it is Ireland, then Greece, then Spain/Italy…

    * Another lesson is living off from the treasures/commodities they stole in their colonial days is long, long over.

    * EU will be a problem for years to come. When the country has that high debt with regard to GNP, they will not be competitive except sending their citizens to be slaves to work for other countries.

    I can hire some to clean my house, cook for me, dance for me and take care of my grand children if the wage is right as long as they’re not lazy and cheaters from their bad culture.

    * Decoupling is the solution. US and China will not be stupid or big enough to rescue a sinking ship.

    * There will be conflicts in the citizens in Greece between those who have (still a lot collecting over $40K USD pension) and those who have to suffer due to passing the debts/miseries to them.

  27. Al
    November 3rd, 2011 at 11:57 | #27

    @TonyP4: “* The lesson of having a good life without working hard is learned again and again. First it is Ireland, then Greece, then Spain/Italy…”

    I can’t speak for other countries (even if I wouldn’t be surprised it’s true also for them), but the tale of “good life without working” is nothing but a fairy tale/stereotype (of mostly anglosaxon/american origin) at least when it comes to Italy. Italians are as hardworking (if not more) as any other european people…the problem is not “not working” (many italians would jump to ur throat if u tell them they “don’t work”, considering how hard they have to work to earn a decent living under the current system), but it is political (i.e. corruption, inefficient bureaucracy and public administration and the system in general), social (lack of real idea and feeling of national unity and incapacity of the politic to cement and increment the existing one) etc. It’s not a matter of amount of work, but a matter of inefficiency of the system, endemic corruption, familistic conduct of economic affairs, frequent inability to work together for a common good even in the economic field etc. Believe me, it would be much better if the problem was really “not working”, it’d be much simpler to solve.
    And believe me, life in Italy for common italians is not “good and easy” as a tourist could imagine being there for few days in beautiful touristic spots. Don’t confound cultural characteristics (for example, good food, art, “stylish way of dressing” etc.), climate endowment (sunny mediterranean weather – at least in the central and southern part of the country – ) that pertains to geographic and socio-cultural history (i.e. something that, say, someone from UK couldn’t have even he/she could avoid working and just enjoy life…just cause UK is geographically not Italy, and socio-culturally different) with “good life” in general..that’s something that for sure can make life “better”, but below that there’re bad and expensive public services, lack of any efficient welfare (and the constant dismantling of the existing one), economic struggle to earn decent salaries, skyrocketing cost of life….

  28. November 3rd, 2011 at 14:18 | #28

    @Al
    Greeks are lazy working for an average 30 hours per week. Many pensioners have about $10,000 USD more than the average US social security, and few pay fair share of taxes.

    I was in a Mediterranean cruise last summer and went to many cities in Italy. To me as a tourist, Italians are pretty laid back with a lot of foreigners working low-wage jobs. With the high ratio of debt/GNP, they will be the next with Spain. Both are far larger than Greece. The world will not have enough money to bail out any one after Greece. We’ll feel the impact from them as the global economies/banks are all interconnected.

  29. November 3rd, 2011 at 18:25 | #29

    This is a good PLA analysis of western power. It clearly shows China is well aware of the gap and is catching up.

    http://www.tudou.com/programs/view/0xBuCAKlzZE/

  30. kchew
    November 3rd, 2011 at 18:59 | #30

    While China’s current main export market is the EU, it is important steer away from the dependency on EU and US export markets. Market prospects in EU/US are limited given the economic downturn and increased protectionist sentiments as a result of the high unemployment rate.

    I have no problem with token amount of China’s reserve going into EU rescue package. However, the Europeans must help themselves first, and really have to cut down on their own expenses, particularly their military budgets. One needs to take into account that the economic downturn has not been able to diminish their military adventurisms.
    The overwhelming of Chinese aids must be targeted at developing nations, particularly those in Africa. More soft loans and grants need to be allocated for construction of roads, bridges, dams, irrigation facilities, power stations, ports, railways, airports, schools and hospitals. I have to admit that there are lots of risks involved in such investments given the unstable geopolitical situations in much of the developing world. However, even if these investments or loans are at risk or suffer from losses, jobs will be provided and the facilities being built provide positive impact to the local economies. As the economies of these developing nations grow at faster, China’s trade with these countries will increase too.

  31. xian
    November 4th, 2011 at 02:10 | #31

    It’s more that working hard doesn’t equate to wealth at all. How many millionaires get there by working a salary? How many Greek multinationals can anyone name? It takes entrepreneurship, ambition, shrewdness and ruthless objectivity to make real money. The Greeks don’t have it in them. In fact, many Westerners frown on such qualities. But hey, nice guys finish last.

  32. November 4th, 2011 at 06:39 | #32

    China is not stupid and/or rich enough to rescue the PIIGS. Greece could be the only one EU country that can be saved, but not the larger Spain and Italy. Greece has been playing the tricks again and again. They should be punished.

    3 pillars of success: hard working, genes, and some luck. The top examples are Bill Gates and Steve Jobs. Most US/EU include inheritance. There are few exceptions but they are not the norm. My friends and classmates in their later working life pretty much stick to the 3 pillars.

  33. Al
    November 4th, 2011 at 20:32 | #33

    @Ray

    Exactly Tony, to u as a tourist (and in fact this is the classic “tourist opinion), cause u’ve been there for a few days and have just seen the surface (i.e. forgive me to say so, it is kinda of a superficial statement)…We often criticize people for giving judgments on China here while they “only” are tourists (and I agree), why should it be different with any other country?
    Know how to enjoy life in ur free time is not being “laid back” it’s simply enjoy ur free time, so that u can work better in ur working time..I don’t know for greece, but common italians work and average of 40 hours week and more (as it is normal in Europe, and I guess common spaniards do the same)…It takes more than the amount of working hours to create a healthy economy, and u should know it if u want to give judgment on this matter. It’s the country/system/politics that has to work to create more richness, and not to deplete what has been created with hard work by normal people. It’s basic economics.

  34. November 5th, 2011 at 06:53 | #34

    @Al
    Most folks in EU work less than 40 hours and collect generous entitlements.

    Both Italians and Spaniards do not live within their means as measured by their debt / GNP. Greece’s ratio is so high that they will not be competitive for a while. Iceland and Ireland are pretty bankrupt. Irish have a tradition to flee from their country (of course after many drinks of Irish beer) when problem arises. It is the laziness that drives folks to live beyond their means. Statistics never lies.

  35. pug_ster
    November 5th, 2011 at 20:54 | #35

    http://english.aljazeera.net/programmes/talktojazeera/2011/11/2011114434664695.html

    Interesting talk to Jin Liqun, supervising chairman of China’s sovereign wealth fund.

  36. November 5th, 2011 at 23:35 | #36

    @pug_ster
    Interesting talk indeed. On the point about people working hard (and JIN Liqun’s point that Europe needs more incentives for her people to work harder), I think that’d be one of the key issues of our life time.

    How hard are people supposed to work? Where do we find that balance. For rich developed countries, they naturally want to bask in their wealth and slow down. For the poor and hungry developing nations, they will want to work really hard to be able to enjoy what the developing nations have.

    If everything equal, I think the long term equilibrium will tend towards everyone having relatively equal standards of living across the planet. Of course, nations endowed with better leadership, resources, education, etc will be able to rise above that equilibrium. Others will lag below.

  37. zack
    November 5th, 2011 at 23:48 | #37

    as an act of good faith, it’d be nice if the Europeans started going about it by returning all those stolen art treasures from the boxer rebellion and the sacking of the Summer Palace.

  38. November 6th, 2011 at 04:35 | #38

    The immediate problem for the able EUers is there are no jobs. Shops are being closed and government is cutting jobs. The private industry will not be competitive as they’ve to pay back any bailout money. The high debt/GNP predicts they will never pay back.

    The able, young, and skilled folks will leave their native country. The young are furious as it is not their fault but their parents’ and grand parents’. Sound familiar in US?

  39. pug_ster
    November 6th, 2011 at 10:49 | #39

    yinyang,

    The problem is due to one country is being more productive than another. Now the more productive countries like Germany and France wants the less productive countries like Italy and Greece to fork over some of its country’s assets and change its labor laws to make people work longer (at least as long as France and Germany.) This is not happening thus the reason why China is not interested in investing in the Eurozone.

  40. raventhorn
    November 7th, 2011 at 06:37 | #40

    Re: Stolen Treasures. I suggest, China should count the fair market value of those treasures as “Trade deficit” against those nations that will not return them. FMV should already include the accrude interests over the decades.

    Re: “Hard work”. It is a personal value judgment on how hard one should work, but one should realize that just because one thinks one is “working hard”, doesn’t mean a damn thing in the global economy.

    I read stories about some people complaining that “All Chinese think about is making money, while some people in Tibet/Xinjiang/etc. are more “LAID BACK””, and I think, well, if you want to be “LAID BACK”, why whine that other people are making more money??

    I have no problem with complaints that Rich people’s kids are getting “no-bid contracts”, or some contract processes are rigged.

    I do have problems with “LAID BACK” people whining about other people who are “too greedy”.

  41. November 8th, 2011 at 06:01 | #41

    It reminds of my coconut theory again. In a tropical island, every one sleeps under a coconut tree. He is waken up by a fallen coconut on his head once a while. He eats the coconut and goes back to sleep. He is lazy due to the nice weather (no need to find shelter) and the nice resource (the coconut tree). He is happy and rich by his own standard.

    You can apply it to SE Asia. Tibetans do not have nice weather and its rich natural resources (measured by per capital) are waiting to be exploited. US is rich by the developed citizens, hard-working immigrants and the huge natural resource per capita.

  42. raventhorn
    November 8th, 2011 at 06:36 | #42

    @TonyP4
    It’s also the ant and the grasshopper story.

    It’s not a war, but it is a competition for survival.

  43. November 16th, 2011 at 08:16 | #43

    Reports say Christine Lagarde has turned down China’s request to include the RMB in the IMF’s special drawing rights’ unit. This was the simplest out of three requests China made in exchange for bailing out Europe. The other two were market economy status in the WTO, or the lifting of a European arms embargo. China would have taken any one of the three. But even the simplest request of them all, the IMF request which many economists agree made economic sense, was turned down.

    http://www.reuters.com/article/2011/11/11/us-china-europe-f-idUSTRE7AA2DU20111111

    Reuters called it a “slap in the face”.

  44. raffiaflower
    November 16th, 2011 at 08:41 | #44

    Christine Lagarde is just the messenger. But the rejection of the Chinese request seems a fitting denouement to the Dominique Strauss-Kahn saga, believed by `conspiracy theorists’ to have been taken out for a likely attempt to end the dominance of the American dollar as global reserve currency. His political career is over, but he remains physically intact, unlike Gaddafi -also believed to have been tilting towards an end to American dollars for Libyan oil. The message is clear to any party that wants to mess with the dollar’s role as global reserve.

  45. zack
    November 16th, 2011 at 09:46 | #45

    no matter; time is on China’s side and as the clock ticks down, the euro keeps depreciating; either the intractable Europeans actually compromise and negotiate or they can resume being relegated to the dustbins of history

  46. raventhorn
    November 16th, 2011 at 14:27 | #46

    West wanting Chinese money to help them, but no Chinese input/vote in IMF.

    Gee, I guess even in desperation, Westerners can’t take any criticism from China at all.

    OK, I see how the “Democracy” works now. It’s about keeping China’s head low and quiet, and keep paying up.

    Well, hey, the West can always get Ai Weiwei’s supporters in the West to fold money into paper planes and throw them into the IMF compound!! LOL!!

  47. November 21st, 2011 at 11:36 | #47
  48. zack
    November 21st, 2011 at 13:46 | #48

    @YinYang
    lol, nice one, deWang;)

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