by Alex Evans | Mar 17, 2008 | Climate and resource scarcity, Global system
As you watch the ongoing tailspin in the dollar’s value and ponder to yourself whether Ben Bernanke is really going to reduce interest rates by a whole percentage point tomorrow, spare a thought for those poor countries – like Ukraine, China and Saudi Arabia – whose currencies are pegged to the dollar. Inflation in all of them is going through the roof as it is, thanks to food, energy and other commodities.
Here’s Ed Yardeni of Yardeni Research:
In emerging economies, core inflation for most people is mostly determined by the prices of food and energy. In these countries, central bankers (who aren’t as politically independent as their counterparts in advanced economies) are reluctant to tighten monetary policy too aggressively to fight inflation because this might trigger a recession, which could be politically destabilising.
So they are increasingly letting their currencies appreciate as their primary anti-inflation policy. This means they are increasingly less willing to prop up the dollar, which then pushes up the key commodity prices that are causing their inflation problem.
David Bowers of Absolute Strategy Research puts it like this: “By failing to recognise the external dimension to the credit crunch, the Fed could introduce a new source of instability.”
by Alex Evans | Mar 17, 2008 | Global system, Influence and networks, South Asia
While China is blocking websites in the hope of preventing news of security force brutality from seeping out, Xinhua is busy denouncing the Dalai Lama as a “master terror maker”. In fact,
The Dalai Lama and his clique have never for a day refrained from violence and terror. His childhood teacher, an Austrian, was a Nazi…
You have to be kidding. Hard to see how China’s going to make a success of the Olympics if this is the best they can come up with on media relations. Moises Naim looks pretty prescient in the light of his observation last November that when the world’s entire activist contingent descends on Beijing,
…the government will inevitably attempt to control and repress the activists. And that will be a new and frustrating experience for a centralized government that is not used to containing well-organized, media-savvy foreigners who work through highly decentralized, international, nongovernmental organizations that know how to mobilize public opinion to advance their causes.
Charlie Beckett, who runs the Public Media Forum at the London School of Economics, reports that the Chinese have been seeking his advice on managing the media better – though it’s not clear how they’d manage to effect such a sea change in so little time, even assuming they were inclined to.
It’s tempting to feel a sense of schadenfreude as China trips itself up over and over again while carrying the Olympic torch, given its appalling human rights record. But on the other hand, remember David Miliband’s observation when he spoke in China last month:
We will only resolve [shared threats like climate change and fragile states] through a new bargain between major states in the international community, embedded in our bilateral relationships, multilateral institutions, and not least the partnership between China, the world’s fastest growing economy, and Europe, the world largest single market. Isolation would be a disaster for that process and there is too much at stake. That is why my message to British people back home is simple. Do not boycott the Olympics, celebrate them instead.
The risk is that if China manages to cock up the Olympics as royally as she seems poised to, then at best it will make it harder to engage her on issues like climate change where there can’t be any solution without her. The world needs China to feel safe to come out of her shell – and this is the best prospect for long term progress on human rights record too (look at Burma, after all – hard to see many signs there of isolation being an effective driver of change).
At worst, of course, the Olympics could go bad at the same time as other chickens (like food inflation or a sharp economic slowdown) come home to roost too – and then all bets would really be off. As Naim commented last year,
It’s fair to say that the Chinese government probably had no idea what it was getting into when it applied to host the Olympics in 2000.
Update: some good reporting here from ITN.
[youtube:http://www.youtube.com/watch?v=xbTsNu08Xqs]
But as Blake Hounshell notes, the LA Times reckons that China’s media strategy is working well for its intended audience – at home:
One key factor is a media strategy that, while still blunt and heavily reliant on censorship and propaganda, shows more nuance than usual for the lumbering Communist Party.
This last week the government has used something it traditionally viewed as a big negative, any suggestion that it’s not in total control, to its advantage by going large with print, still and video coverage of Tibetans attacking Han Chinese in the Tibetan capital, Lhasa, and destroying their property.
Not only does this rather ironically paint the Chinese state and its massive police force as something of a victim, analysts said, but it also stirs up feelings of fear and anger among many Han, the nation’s majority population, that add a personal dimension to the riots.
by Alex Evans | Mar 17, 2008 | Africa, East Asia and Pacific
Interesting to read the argument made today that China’s overseas diplomacy has in some cases – like Sudan – been “hijacked” by state-owned companies like PetroChina, that are alleged to have become “very powerful interest groups” in their own right.
Very interesting to see who’s making it: scholars at “leading Chinese think-tanks and universities in Beijing“, speaking in multiple interviews. As Richard McGregor comments, “China’s foreign ministry has not been critical of CNPC but the comments by senior academics in Beijing suggest substantial disquiet in official circles about overseas investments.”
by Alex Evans | Mar 14, 2008 | Climate and resource scarcity, Influence and networks, UK
You just can’t keep a good man down. You might think he’d want a rest after a decade as Prime Minister. You might suppose he’d have his hands full sorting out the Middle East. You might reckon he’d be busy planning his impending role as the next President of Europe. But – pah!
[youtube:http://www.youtube.com/watch?v=2K9rVRuehGU]
Tony Blair is to lead a new international team to tackle the intractable problem of securing a global deal on climate change which would have the backing of China and America. The former prime minister believes he can help prepare a blueprint for an agreement to cut carbon emissions by 50% by 2050, and has the backing of the White House, the UN and Europe, including Gordon Brown.
He told the Guardian he has been working on the project with a group of climate change experts since he left office last summer, and will publish an interim report to the G8 group of industrialised nations this summer. “This is extremely urgent. A 50% cut by 2050 has to be a central component of this. We have to try this year to get that agreed, because the moment you do agree that, then you have something for everyone to focus upon. We need a true and proper global deal, and that needs to include America and China,” Blair said.
Mark Lynas has more in a Comment is Free piece published today. (Incidentally, if we’re still focused on two degrees C – as we should be, and as Mark certainly is in his CiF piece – then it’s worth noting right at the beginning that the IPCC says in its Fourth Assessment Report that to limit warming to between 2.0 and 2.4 degrees, then the global emissions cut by 2050 needs to be between 50 and 85 per cent. Hard to avoid the suspicion that we’ll need to be at the deep end of that emissions reduction range in order to come in at the low end of the temperature increase range.)
by Alex Evans | Mar 12, 2008 | Climate and resource scarcity, Economics and development, Global system
That’s the headline conclusion of an IPS analysis piece by John Vandaele. Average GDP growth in developing countries today is 7 per cent, compared to 3 per cent for developed countries; and even per capita income grew faster in South than North between 2003 and 2007 (old news in East and South Asia, but a big shift in Latin America and Asia). And whereas in 1980 developed country GDP was 23 times higher than in developing countries, it was 18 times higher in 2007. Vandaele comments:
East and South Asia are almost exclusively responsible for this. For Africa, Latin America and the so-called transition economies (former communist countries), the relative gap is much wider today then in 1980. Nevertheless the last five years show a generalised improvement in the South. More and more, South-South relations play a role in the world’s economy. India and China thrive because of their industrial and services success, but their boom drives up commodity prices, and so benefits even quite weak economies in Africa and Latin America. South-South interaction makes globalisation a tide that lifts almost all boats.
But, he goes on, “inside most countries, income inequality is on the rise” – faster in developing than developed countries, and fastest of all in China.
Between 2001 and 2003 the Chinese economy grew 10 percent each year, but the 10 percent bottom earners lost 2.5 percent in income, according to the World Bank. Official figures show that the difference between the top 20 percent and the bottom 20 percent grew 40 percent over the last three years.
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