Comments on: Why China Won’t Throw A Lifeline To The West

By: Small Things Which Say A Lot | The China Vortex

Small Things Which Say A Lot | The China Vortex — Sun, 07 Dec 2008 00:48:59 +0000

[...] I have been telling my friends that China is not going to use its foreign exchange reserves to bail out the US and the rest of the world. Aside from the fact that China does not feel like a superpower, it is becoming apparent with each [...]

By: Matt

Matt — Tue, 14 Oct 2008 19:00:48 +0000

It’s true that there’s been very little mention of China helping to solve the financial crisis, but I think it’s inevitable that they will have some kind of role. For example, I think it will be politically much easier for Chinese to buy up American firms as the crisis progresses, and that will be crucial as American and European firms are unwilling or unable to throw capital around in this kind of situation. Whether this is “throwing a lifeline” I guess could be debated, but mostly it just seems like the smart thing to do. China could also help out by continuing to let its currency appreciate. This will also probably happen, as China makes big investments in developing the countryside. Honestly, China looks pretty well set up on all fronts, and I doubt they’re set on destroying western/global finance entirely.

Oh and did you see the most recent issue of Foreign Affairs has an article written by Henry Paulson himself? He also just headlined a fundraiser for the US-China Education trust.

http://tinyurl.com/5b3fd7

By: lee

lee — Tue, 14 Oct 2008 14:57:42 +0000

Please give sources for your points, particularly the third one.

Just like the title of the guardian article, the premise of this one is getting a bit ahead of itself. Nowhere is there evidence that westerners expect China to bail out their banks. Nonetheless the points made are interesting, if established on any fact.

Can China do fine without export markets? Their export markets aren’t going to completely disappear any time soon, but as I understand it the numbers don’t support that statement.

By: Joyce

Joyce — Tue, 14 Oct 2008 10:17:37 +0000

I’ve been working on the financial news desk for the last few months (great time to start THAT new job), so I’ve been reading stuff from all over the world about this crisis. I know more about the minutae than I ever wanted.

And the idea of China rushing in to save Western economies is just not discussed in any of the circles I move in, or read about.

The only person who brought this up with me was my dad, who always wants China to do well. There was an edge of indigence when he asked why China wasn’t playing a bigger role in all these fancy G-7-type talks. (China is part of the G-20)

I guess it’s because the root of the problem is with things like big old investment banks and major stock markets (the major ones being NY, London, Tokyo and HK, with Shanghai as only a very young, small player). China may hold alot of foreign reserves, but it’s not going to pour money into these financial institutions, or help Western governments to do the same. China is still much more manufacturing-focused than financial services-focused.

Your piece is right. China has to invest in China. And the more developed China becomes, the better it will be for the entire world in the long-run. Wall Street, Washington and Fleet Street have to solve their own problems — and hopefully prevent them from affecting everyone else quite so much.

By: Matt

Matt — Mon, 13 Oct 2008 15:48:30 +0000

Why not suppose that there are enough reserves to go around and cover all the bases? Clearly if China can use its reserves to carry weight internationally, that is an important goal too.