David Cameron Explains The Paradox Of Thrift To The Chinese

[scepticus]

"David Cameron warned yesterday that Britain could be plunged into recession by a "tidal wave" of money flowing from West to East.

Speaking in China before heading to the G20 meeting of world leaders in Korea, Mr Cameron said a global trade and currency crisis was approaching which could spell disaster for jobs and businesses in the UK.

World leaders look set to clash during the two days in Seoul as America feels cheap Chinese goods are undermining the West's economy and China rages at efforts to block its products from Europe and America.

Following rows with the Chinese leadership, the Prime Minister warned that the crisis could lead to global economic disaster.

"Let's get straight to the point," he said in Beijing. "The world economy has begun to grow again after the crisis. But that growth is very uneven. Led by China, Asia and other emerging markets are growing quickly. But in much of the advanced world growth is slow and unemployment stubbornly high."

Mr Cameron said Britain has already started to cut its debt. But he added: "Some countries have been saving too much while others like mine have been saving too little.

"And the result has been a dangerous tidal wave of money going from one side of the globe to the other."

Mr Cameron warned if China failed to open its markets to Western goods, barriers would be raised to its products in the West and the global economy would go into the downward spiral it saw in the 1930s.

He added: "Countries will be tempted to try to maximise their own growth and their own employment, at the expense of others and globalisation could go into reverse.

"If we follow that path we will all lose. The West for sure. But so too would China."

[Bloo Loo]

"David Cameron warned yesterday that Britain could be plunged into recession by a "tidal wave" of money flowing from West to East.

Speaking in China before heading to the G20 meeting of world leaders in Korea, Mr Cameron said a global trade and currency crisis was approaching which could spell disaster for jobs and businesses in the UK.

World leaders look set to clash during the two days in Seoul as America feels cheap Chinese goods are undermining the West's economy and China rages at efforts to block its products from Europe and America.

Following rows with the Chinese leadership, the Prime Minister warned that the crisis could lead to global economic disaster.

"Let's get straight to the point," he said in Beijing. "The world economy has begun to grow again after the crisis. But that growth is very uneven. Led by China, Asia and other emerging markets are growing quickly. But in much of the advanced world growth is slow and unemployment stubbornly high."

Mr Cameron said Britain has already started to cut its debt. But he added: "Some countries have been saving too much while others like mine have been saving too little.

"And the result has been a dangerous tidal wave of money going from one side of the globe to the other."

Mr Cameron warned if China failed to open its markets to Western goods, barriers would be raised to its products in the West and the global economy would go into the downward spiral it saw in the 1930s.

He added: "Countries will be tempted to try to maximise their own growth and their own employment, at the expense of others and globalisation could go into reverse.

"If we follow that path we will all lose. The West for sure. But so too would China."

this assumes we all NEED globalisation.

surely a true globalist would see the future as everyone producing everything they needed.

not the we make 1% of everything everyone needs and the other 99 make 1% each of the remainder....communism if ever I saw it.

[LuckyOne]

The "thing" being threatened by the paradox of thrift is globalisation.

To put it mildly, there is not a consensus view that globalisation, in they way that it is being manifested, is healthy.

[aa3]

If China would spend 20 billion USD worth of its annual surplus buying from the UK. And we assume each 100,000$ creates 1 job.. then that would mean 200,000 jobs created in the UK.

[Bloo Loo]

If China would spend 20 billion USD worth of its annual surplus buying from the UK. And we assume each 100,000$ creates 1 job.. then that would mean 200,000 jobs created in the UK.

what do we make that they need?, or, what COULD we make that we could make cheaper or better than them, ship it to them, and make a profit in the sales chain?

pray tell?. I am in need of a good new business plan

[aa3]

what do we make that they need?, or, what COULD we make that we could make cheaper or better than them, ship it to them, and make a profit in the sales chain?

pray tell?. I am in need of a good new business plan

There are a few things, but its not good compared to some nations. Rolls Royce engines, Glaxo and Astra Zenica pharmacueticals, software for all sorts of applications, there is a litte bit of British luxury brands which are popular in Asia.. including the luxury cars, some spirits and hard alcohol.

We're actually pretty strong on some of the services stuff. Like management, advertising, financing.

[Stars]

David Cameron warned yesterday that Britain could be plunged into recession by a "tidal wave" of money flowing from West to East.

The problems we are experiencing are not in China, they are here. This is an uncomfortable thought for Mr Cameron and many others who would perhaps rather the issue was in China, or imaginary tidal waves of various forms and so therefore in-addressable. If Mr Cameron really wants to help the people in the uk, he should consider reforms which might reduce or eliminate the gargantuan rent-seeker load falling on workers in the uk, so allowing our labour to compete in markets around the world. Of course he won’t do this

[Tired of Waiting]

The problems we are experiencing are not in China, they are here. This is an uncomfortable thought for Mr Cameron and many others who would perhaps rather the issue was in China, or imaginary tidal waves of various forms and so therefore in-addressable. If Mr Cameron really wants to help the people in the uk, he should consider reforms which might reduce or eliminate the gargantuan rent-seeker load falling on workers in the uk, so allowing our labour to compete in markets around the world. Of course he won’t do this

+ 1

Good post.

Even France exports almost £30bn/year to China. We export £7bn.

It is our own fault.

Scape goats are very useful, for all politicians, from Brown to Cameron, from Merv to Andrea Turner. Don't let them fool you.

Our credit bubble was not China's fault. It was our own fault.

[Reck B]

what do we make that they need?, or, what COULD we make that we could make cheaper or better than them, ship it to them, and make a profit in the sales chain?

pray tell?. I am in need of a good new business plan

eeerm

Marmite? !

[Guest_FaFa!_*]

property investment courses would be well received

seriously though education services or anything to do with western style food the protein consumption in China will go through the roof also anything non Chinese and more western in food types such as dairy, bread and meats, is a burgeoning market for the willing.............

Agreed, the Chinese view foreign as "exotic" and "classy" and don't trust Chinese brands (see baby milk powder scandal as example). High demand for western goods as luxury items. Education is a large export market for the UK and with continuing GBP weakness has plenty of opportunity to grow. Problems previously associated were students staying on maybe be mitigated by the continuing weak economy and tightening of visa requirements. Another problem is our high end tech revolves around pharmacy (fine for Chinese export) and military or tech with military applications (more problematic)

Edited November 11, 2010 by FaFa!

[Fishman]

what do we make that they need?, or, what COULD we make that we could make cheaper or better than them, ship it to them, and make a profit in the sales chain?

pray tell?. I am in need of a good new business plan

Ballot boxes.

[gimble]

what do we make that they need?, or, what COULD we make that we could make cheaper or better than them, ship it to them, and make a profit in the sales chain?

pray tell?. I am in need of a good new business plan

Many Hollywood productions that are hugely popular in China are actually produced in the UK, (albeit financed by the US studios - but the jobs, like mine, are in the UK). These films are pirated on a massive scale in China, depriving the industry of the revenues that would improve job creation and wages over here. China simply does not play by the WTO rules. So it's not a question of finding something that China wants that we produce - it's a question of getting them to pay for it. Scotch whisky is another example - I read in the Economist that it's becoming very fashionable amongst wealthy men in China, but a large part of what is sold is counterfeitted stuff. Another example is the MG-F - when Rover died the whole production line was shipped to China where these cars are now being made. It's a British product, the only reason that we couldn't sell it to them was because the pound is hugely overvalued agains the Yuan (because China would rather buy our Treasuries than our products, I guess it's bovious why though in that particular case - they get the jobs, we get the debt).

Basically I blame China!

[Toto deVeer]

Basically I blame China!

Basically, I blame the US!

My fondest dream for my children is a world where patent laws (not copyright or trademark) are completely erased from the face of the earth.

[Ruffneck]

Since when has China done something not in it's best economic interest?

Nothing will change , China will never have any kind of emissions trading tax or a fast yuan appreciation , it's business as usual people.

[Guest_FaFa!_*]

Since when has China done something not in it's best economic interest?

Refusal to deal with European traders 19th century

Refusal to deal with reality when Europeans came back with guns

Great Leap Forward

Cultural Revolution

On going problems with State Owned money pits

Arguably, its mercantilist policies are not helping, neither is its inability to deal with endemic corruption and piracy within the country, which stifles innovation and creates a chronic culture of short termism.

Commie govts are good at building infrastructure - knock down the peasant's house, build the railroad/bridge. Long term sustainable economies are not their forte as that would involve not being a control freak. Their continuing prosperity is determined on battering their currency to death - hard to see that as as a long term play.

Edited November 11, 2010 by FaFa!

[Toto deVeer]

Commie govts are good at building infrastructure - knock down the peasant's house, build the railroad/bridge. Long term sustainable economies are not their forte as that would involve not being a control freak. Their continuing prosperity is determined on battering their currency to death - hard to see that as as a long term play.

The late Milton Friedman visited Beijing some years ago and from his limo noted a bridge project being constructed. There were thousands of workers with shovels and almost no equipment and the work was progressing very slowly. He asked his Chinese government minder why they didn't use modern equipment, who replied "This is a part of a large government initiative to create more jobs for the Chinese people".

To which Friedman replied, "Well, if that is the goal, instead of shovels, why don't you give them spoons then?"

[Ruffneck]

I was more taking about 1970s onwards , after Nixon sold out and acquired a hard on for China.

They're basically at where Great Britain was 200 years ago - powerhouse of the world but with low wages , child labour and massive pollution problems.

It wouldn't take much to bring China crashing in on itself , do your bit by buying as few Chinese slave labour goods as possible.

[Olebrum]

So the paradox of thrift is not about watching daddy's money then?

WTF does Dave know about thrift?

[Injin]

"David Cameron warned yesterday that Britain could be plunged into recession by a "tidal wave" of money flowing from West to East.

Speaking in China before heading to the G20 meeting of world leaders in Korea, Mr Cameron said a global trade and currency crisis was approaching which could spell disaster for jobs and businesses in the UK.

World leaders look set to clash during the two days in Seoul as America feels cheap Chinese goods are undermining the West's economy and China rages at efforts to block its products from Europe and America.

Following rows with the Chinese leadership, the Prime Minister warned that the crisis could lead to global economic disaster.

"Let's get straight to the point," he said in Beijing. "The world economy has begun to grow again after the crisis. But that growth is very uneven. Led by China, Asia and other emerging markets are growing quickly. But in much of the advanced world growth is slow and unemployment stubbornly high."

Mr Cameron said Britain has already started to cut its debt. But he added: "Some countries have been saving too much while others like mine have been saving too little.

"And the result has been a dangerous tidal wave of money going from one side of the globe to the other."

Mr Cameron warned if China failed to open its markets to Western goods, barriers would be raised to its products in the West and the global economy would go into the downward spiral it saw in the 1930s.

He added: "Countries will be tempted to try to maximise their own growth and their own employment, at the expense of others and globalisation could go into reverse.

"If we follow that path we will all lose. The West for sure. But so too would China."

Not a problem unless there is fiat money.

Easy solution - stop using force to craft money.

[R K]

When Dave stops hand wringing and actually does something for the benefit of the 98% in the UK rather than the 2% I'll pay attention.

Import tariffs would be a great place to start..........

Tell the Chinese that's what's happening within 3 months. Then do it.

[winkie]

Funny how nobody was interested in China when they were not needed only used.

[tallguy]

Refusal to deal with European traders 19th century

Refusal to deal with reality when Europeans came back with guns

Great Leap Forward

Cultural Revolution

On going problems with State Owned money pits

Arguably, its mercantilist policies are not helping, neither is its inability to deal with endemic corruption and piracy within the country, which stifles innovation and creates a chronic culture of short termism.

Commie govts are good at building infrastructure - knock down the peasant's house, build the railroad/bridge. Long term sustainable economies are not their forte as that would involve not being a control freak. Their continuing prosperity is determined on battering their currency to death - hard to see that as as a long term play.

China is the oldest surviving civilisation on Earth. During this time countless others have grown and turned to dust.

You think this has got anything to do with capitalism and communism?....

Edited November 11, 2010 by tallguy

[Injin]

China is the oldest civilisation on Earth. During this time countless others have grown and turned to dust.

You think this has got anything to do with capitalism and communism?....

China has also not done a right lot apart from farm.

This is a problem of slavery - the owners tend to be the smarter ones and then the smarter ones don't need to invent labour saving devices as they can just throw more coolies at whatever problem they have.

[Ruffneck]

Funny how nobody was interested in China when they were not needed only used.

Once a cheaper labour country comes online China will go backwards economically just like the west has done the past 20 years.

[tallguy]

China has also not done a right lot apart from farm.

This is a problem of slavery - the owners tend to be the smarter ones and then the smarter ones don't need to invent labour saving devices as they can just throw more coolies at whatever problem they have.

Ever heard of the silk road?

China is the first and last word in trade (quite a bit of it not "free" of course and as usual)

The communist era was a mere blip in the history of that trading tradition.

Edited November 11, 2010 by tallguy