A Chinese Thanksgiving and the World Economic Crisis

Posted by: Dexter Roberts on November 28, 2008

Another visit to the lovely Diaoyutai Compound in west Beijing, this time it is Thanksgiving Day, and a beautiful sunny one too. The Chinese Foreign Ministry has gathered a group of mainly American journalists (and at least one from Chinese media, the China Daily) to ask questions about the U.S.-China economic relationship, pertinent given next week’s bilateral scheduled meeting, the fifth Strategic Economic Dialogue running Dec. 4-5. The last time I joined one of these in June, before the fourth SED, I was lectured at by one of the attending officials about press responsibility. This time thankfully, none of that.

The issues today are largely the same: building a strong trade relationship and overcoming protectionism, as well as cooperating on energy and environmental issues. One big change: this will be the last meeting before the new Obama administration, including a new Treasury Secretary, takes over next January. The Chinese side assures us that the dialogue will continue.

But following the collapse of Lehman Brothers in September and the onset of the global economic crisis, an even more compelling issue has arisen: to what degree, if at all, can China boost its domestic consumption, (consumption an appropriate topic for Thanksgiving, I think, even if the lunch banquet prepared for us features no turkey nor cranberry sauce; instead it’s decent Chinese fare, including with the obligatory final fruit plate and Jasmine tea) the spending of its 1.3 billion people, and so help pick up the slack as the U.S. economy and others crater, and the once spend-thrift American consumer starts scrimping. China’s decision to slash interest rates the day before is an example of China taking action aimed at boosting consumption.

The presiding official Zhu Guangyao, assistant minister of finance, commented as expected: how with globalization the world’s countries’ economic interests were even more connected, how everyone must work together to combat the financial crisis, how the U.S. and China both must cooperate to block protectionism, that being a particular risk in times of economic downturn. And how all this remained true even as a new U.S. president prepares to take over. Also important: how China’s recently announced $586 billion stimulus package was aimed at boosting the Chinese people’s confidence, and so ultimately their consumption. And how that would not only benefit China, but also was important for the world. All true, no doubt. But on how bilateral economic talks and policies might help the Chinese become bigger consumers, nothing substantive was said at all. I suppose that omission can be understood. That may be simply because the challenges in getting anyone in any country to open their wallets and spend their savings, even as the world economy looks ever bleaker, are truly formidable. .

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