Message to America from China: "Be Nice To Countries That Lend You Money"
Niranjan Rajadhyaksha -
Tuesday, December 09, 2008 4:25 PM
The Chinese seem to have decided that it is time they told Americans a few blunt truths.
The website of Atlantic Monthly has an incisive and entertaining interview by James Fallows of Gao Xiqing, who manages $200 billion of China’s $2 trillion forex reserves.
Here are a few of the punches thrown by one of the most influential men in the Chinese financial sector.
1. "People, especially Americans, started believing that they can live on other people’s money. And more and more so. First other people’s money in your own country. And then the savings rate comes down, and you start living on other people’s money from outside. At first it was the Japanese. Now the Chinese and the Middle Easterners.
"We—the Chinese, the Middle Easterners, the Japanese—we can see this too. Okay, we’d love to support you guys—if it’s sustainable. But if it’s not, why should we be doing this? After we are gone, you cannot just go to the moon to get more money. So, forget it. Let’s change the way of living."
2. "Finally, after months and months of struggling with your own ideology, with your own pride, your self-right-eousness … finally [the U.S. applied] one of the great gifts of Americans, which is that you’re pragmatic. Now our people are joking that we look at the U.S. and see “socialism with American characteristics."
3. "The simple truth today is that your economy is built on the global economy. And it’s built on the support, the gratuitous support, of a lot of countries. So why don’t you come over and … I won’t say kowtow [with a laugh], but at least, be nice to the countries that lend you money."
Meanwhile, Chinese officials lectured US treasury secretary Hank Paulson on what he should be doing, a neat reversal of the situation ten years ago when crisis-hit Asian countries were the subject of such lectures from Washington.
"Washington was lectured about economic fragility yesterday by senior Chinese officials, who urged the US to stabilise its economy, boost the savings rate and protect Chinese investments.
The message went to Hank Paulson, the US Treasury secretary, who was in Beijing for an economic dialogue that he helped launch to discuss long-term issues."
And...
"Eswar Prasad, a senior fellow at the Brookings Institution, said: "One result of the crisis is that the US no longer holds the high ground to lecture China on financial or macroeconomic policies. This may actually help turn their relationship into a more equal partnership."
The Financial Times says in an editorial that: "It would have taken a heart of stone not to smile at the spectacle of Hank Paulson, US Treasury secretary, receiving a lecture on economic stabilisation from Chinese officials."
And FT adds: At a separate event in Hong Kong, the chairman of China’s sovereign wealth fund pointed out that many developing countries had clearer and more consistent economy policies than Mr Paulson did. Ouch.
Ouch, indeed!
The head of China's sovereign wealth fund has also been blunt about American arrogance, according to this Reuters report.
"On the one hand, the U.S. needs us; on the other hand, they're suspicious toward us. They want us to invest at their will. That's not sincere cooperation," Wang Jianxi told a financial conference in Shanghai.
It helps to have $2 trillion in the kitty.