China Sliding Into Not Recession, But Worse? 1930s-Style Trade Wars Loom.
Times Online:Violent unrest rocks China as crisis hits
The collapse of the export trade has left millions without work and
set off a wave of social instability, writes Michael Sheridan in Hong Kong.
Bankruptcies, unemployment and social unrest are spreading more widely in China than officially reported, according to independent research that paints an ominous picture for the world economy.
The research was conducted for The Sunday Times over the last two months in three provinces vital to Chinese trade - Guangdong, Zhejiang and Jiangsu. It found that the global economic crisis has scythed through exports and set off dozens of protests that are never mentioned by the state media.
While troubling for the Chinese government, this should strengthen the argument of Premier Wen Jiabao, who will say on a visit to London this week that his country faces enormous problems and cannot let its currency rise in response to American demands.
The new US Treasury secretary, Timothy Geithner, has alarmed Beijing and raised fears of a trade war by stating that China manipulates the yuan to promote exports.
However, a growing number of economists say the unrest proves that it is not the exchange rate but years of sweatshop wages and income inequality in China that have distorted global competition and stifled domestic demand. The influential Far Eastern Economic Review headlined its latest issue “The coming crack-up of the China Model”...
Business Week: American Recession, Chinese Depression? Parallels to 1929
If we look back at the Great Depression, we see that the U.S. was hit harder than virtually any other European or Asian country. For example, between 1929 and 1932, industrial production plunged by 45% in the U.S., compared to 41% in Germany, 26% in France, and 11% in Britain (see table 1 here ).
Measures of real GDP shows an even bigger disparity between the U.S. and other countries in the Great Depression.
Where the Great Depression Hit the Hardest
Change in Real GDP, 1929-1933
United States -29%
Germany -10%
France -9%
Italy -3%
United Kingdom -2%
Japan +11%
The plunge in U.S. real GDP from 1929 to 1933 was far bigger than comparable countries, at least according to data from Angus Maddison.
Why the disparity? There’s all sorts of reasons, relating to monetary policy and other factors. But in part, the U.S. was hit harder because it was a ‘trade surplus’ country-that is, a net exporter of goods. By contrast, Great Britain (for example) was running a sizable merchandise trade deficit in 1929, so cutbacks in spending would be felt more outside of Britain.
The question now is whether China, and more generally the trade surplus countries of East Asia, are going to play the role of the U.S., as acted out in 1929 and the years that followed. Already Korean and Taiwan exports have been collapsing...
The collapse of the export trade has left millions without work and
set off a wave of social instability, writes Michael Sheridan in Hong Kong.
Bankruptcies, unemployment and social unrest are spreading more widely in China than officially reported, according to independent research that paints an ominous picture for the world economy.
The research was conducted for The Sunday Times over the last two months in three provinces vital to Chinese trade - Guangdong, Zhejiang and Jiangsu. It found that the global economic crisis has scythed through exports and set off dozens of protests that are never mentioned by the state media.
While troubling for the Chinese government, this should strengthen the argument of Premier Wen Jiabao, who will say on a visit to London this week that his country faces enormous problems and cannot let its currency rise in response to American demands.
The new US Treasury secretary, Timothy Geithner, has alarmed Beijing and raised fears of a trade war by stating that China manipulates the yuan to promote exports.
However, a growing number of economists say the unrest proves that it is not the exchange rate but years of sweatshop wages and income inequality in China that have distorted global competition and stifled domestic demand. The influential Far Eastern Economic Review headlined its latest issue “The coming crack-up of the China Model”...
Business Week: American Recession, Chinese Depression? Parallels to 1929
If we look back at the Great Depression, we see that the U.S. was hit harder than virtually any other European or Asian country. For example, between 1929 and 1932, industrial production plunged by 45% in the U.S., compared to 41% in Germany, 26% in France, and 11% in Britain (see table 1 here ).
Measures of real GDP shows an even bigger disparity between the U.S. and other countries in the Great Depression.
Where the Great Depression Hit the Hardest
Change in Real GDP, 1929-1933
United States -29%
Germany -10%
France -9%
Italy -3%
United Kingdom -2%
Japan +11%
The plunge in U.S. real GDP from 1929 to 1933 was far bigger than comparable countries, at least according to data from Angus Maddison.
Why the disparity? There’s all sorts of reasons, relating to monetary policy and other factors. But in part, the U.S. was hit harder because it was a ‘trade surplus’ country-that is, a net exporter of goods. By contrast, Great Britain (for example) was running a sizable merchandise trade deficit in 1929, so cutbacks in spending would be felt more outside of Britain.
The question now is whether China, and more generally the trade surplus countries of East Asia, are going to play the role of the U.S., as acted out in 1929 and the years that followed. Already Korean and Taiwan exports have been collapsing...