Beijing’s purse strings

Beijing’s purse strings

“Beijing has shifted regulatory scrutiny to controlling credit risks rather than boosting economic growth, which has already returned to pre-pandemic levels.”

Financial Times 06Apr21

What Beijing does about credit will in future determine the course of much international trade. Looking to have a stable economy President Xi and his finance people are setting their sites at controlled growth. That means ‘more control’ than they have exercised until now. The pace of growth and the amount of money now circulating in the world, partly as a result of the pandemic, must surely give rise to concerns about inflation and currency devaluation.

The United States needs to get back on the growth path it had, too, but it has other major concerns as well –  to renew the crumbling infrastructure of the USA and to catching up with China. China is, after all, set to overtake the USA as the world’s major player at some point. “But not,” thinks President Biden (I’ll bet) “on my watch”. The President has pumped unprecedented amounts of money into the United States system. He is right to do so but he must listen to Janet Yellen at the same time asking for low taxation of business. She would ask for that, of course, wouldn’t she, but her request this time sounds more strident than hitherto.

That China and the United States must compete is obvious. There are other concerns for those watching the contest – Taiwan, at the top of the list, South China Sea mostly contingent upon the future of that island, India, Philippines, ASEAN, North Korea – you can continue typing these things out but the longer list doesn’t get any more bearable. These are territorial, political and military power issues which we all think are the more immediate worries. They may well be so. Business is playing a much bigger part in the politics of the world even than it did before Covid.

Jack Ma’s treatment notwithstanding, the political role for business is going to get bigger. So big in fact that we must consider ways of reaching international agreements to moderate growth – for climate change reasons, if not for detente –  and keep in check the race to the economic top. Not even the arms salesmen want a war, because we all know that WWIII is likely to be the last war humankind will see. So we must keep the competition vigorous but not lethal.

China has to consider which agreements it honours as well as those it intends to tear up. Credibility fails at a certain point of dishonour. China is an ancient empire re-emerging as a vast populace, possibly too big for lasting tough central control. But it will be just like empires before it, land-acquisitive, disciplinarian, authoritarian, ambitious. An encroaching empire today has to contend with worldwide communications, either by allowing them or by suppressing them. The latter isn’t a long term solution. Satellite communications is now sophisticated enough to penetrate any existing protective screen.

But Mao showed the potential power of a China leader and much can be done to sustain an authoritarian system before the demands for freedom become overwhelming. Those demands will be raised by developing economic success. People don’t want forever to kowtow to authority they don’t trust or that disregards their own preferences. But whether the clash of ideologies between the authoritarians and the democrats will itself lead to a war is doubtful. People usually fight over land and wealth, rather than political ideologies.

Western leaders are now faced with many challenges. They should put this one at the top of their priorities list. The world has faced crises of an international scale before. In the past they never threatened the survival of large parts of the human race. They do now. The greatest dangers are misunderstandings and accidents. The history of these causing disasters is there for all to see – Hiroshima, Nagasaki, Pearl Harbour, Dunkirk and many more.

Today our militaries have been politicised and they have a much bigger say than they did 100 years ago. Their propensity is aggression; they still believe that attack is the best defence and, of course, they are right. That is why strong control of the military is so important, especially in an age when there are enough lunatics about to start an international nuclear war killing most people.

It is a time when the cognoscenti must make their thoughts and wishes better known. When thinking about the present must give way to longer term considerations of survival and sustainability beyond your lifetimes. When duty to my fellow human must be greater than a soup kitchen queue. When accommodating different ideologies must be second nature to us. When Black Lives Matter and what you think, believe and wish for, also greatly matters.

For every tiny voice must be heard and every little vote must be counted if we are to survive.

And every waking thought must be for the future.