Chuckling over China

In: Uncategorized

5 Jun 2010

It is hard to resist a chuckle at yesterday’s call from the Financial Times (FT) for higher wages and living standards for Chinese workers.

The same newspaper has called for austerity in the developed world. For example, its 23 May editorial on Britain’s new age of austerity argued:

“The [Liberal-Conservative governing] coalition has been strong on the rhetoric of austerity. It must now follow through with deeds as well as words.”

However, it would be wrong to single out the FT for this apparent double standard. Many other western media are falling over themselves to support a recent strike at a Honda plant in southern China and the plight of the Foxconn workers (see 30 May post).

So what is going on? It would be wrong to see it as a simple hypocrisy. Essentially the FT and others believe that the fiscal plight of the developed world means that austerity is necessary in the rich countries. However, they go along with the view that puts the main onus on China, through increasing its domestic consumption, to rebalance the global economy.

This is essentially saying the problems of the global economy are more the result of too much saving by the Chinese (and perhaps the Germans) rather than weak growth in the western world. This absolves the developed countries of much of the responsibility for the global downturn.

Therefore, from this perverse worldview, consumption can be a problem in the West but welcomed for the Chinese. It is another way of avoiding hard questions about the roots of the economic crisis in the developed world.