China’s Pres Should Get McDonald’s On Visit, US Should Have Put Tariff

Wisconsin Gov. Scott Walker also called on Obama on Monday to cancel the state dinner.

Global markets rebounded Tuesday after China’s central bank cut its key interest rate to support growth in the world’s second-largest economy.

A sudden loss in confidence in Beijing’s ability to rescue its collapsing stock market and restore confidence in its currency became, overnight, a worldwide event. “Our government should have stopped China from devaluing”. Some 2,000 stocks out of about 2,800 on China’s two mainland exchanges fell by the 10 per cent daily limit, according to Hexun, a financial news website.

Analysts say that while Tuesday’s actions by the central bank may calm the stock market turmoil for now, the country faces a long period of uncertainty that will create more volatility.

The most recent selloff has more serious implications because they come after the Chinese government has implemented measures that have not had the desired effect.

Between 1980 and about 2008, China’s record-breaking economic growth was a product of a social miracle that happened to be comparatively easy to manage from within an authoritarian state: The emergence of a billion people from peasant-farming poverty into export-driven industrial employment.

While Xi may bet on staying the course, numerous tens of millions of retail stock investors who lost money in the market drop are still expecting a bailout.

The moves in China – SA’s single largest trading partner – revived appetite for emerging market assets and investors banked on renewed demand for commodities. “The instances of change in China’s currency regime have been few and far between, and each instance has resolutely embraced a progressively liberalising tendency”. “Ours aren’t. We don’t know what we’re doing”. It’s time for China to commit to the next steps in its evolution from communism to capitalism, and be clear about it. Financial repression results in an enormous misallocation of capital. Premier Li Keqiang has, with good reason, emphasised the growth and reform of the stock market as a facilitator of the emergence of the new, entrepreneurial edge of the Chinese economy. There will be missteps.

Republican presidential front-runner Donald Trump late Monday voiced frustration with an invitation to Chinese President Xi Jinping to attend a formal dinner at the White House next month.

And this matters because China has indeed become a consumer nation, of sorts.

This week we also featured a series analysing Japanese Prime Minister Shinzo Abe’s speech on the occasion of the 70th anniversary of the end of World War II which can be found in the list below.

Peter Drysdale is Editor of the East Asia Forum.