Seoul Survivor November 16, 2010 Andrew Jackson 5 comments My thoughts on the Seoul G20 – from the Mark. Facebook Twitter Email
Andrew you conclude “The only ray of light is that the next G20 â€“ in France â€“ may yet take a serious look at global currency reform. And Canada, with a growing trade deficit driven by the over-valued loonie â€“ may yet climb on board.”
I agree with the first part, Sarko speaks tonight (Tuesday). I find the second hard to agree with. Finance has been asleep for years on the state of world monetary order. Backing the Americans as they go down the slope has been policy forever. Unless world currency policy can be made into a political issue here (and elsewhere) I see nothing positive coming especially under the Conservatives.
My own take is posted at rabble.ca under top picks. I defend China, and warn what will happen when it adopts a currency appreciation policy; a sort of German approach to manufacturing could well emerge.
There was a tongue-in-cheek essay about the G20 in yesterday’s Globe Business section (online) – http://www.theglobeandmail.com/report-on-business/commentary/derek-decloet/the-g20-communiqu-the-really-honest-version/article1797633/
Duncan I agree that changing in the exchange rate would not have much impact on the US trade deficit.
As for China, I think the key need is to shift to a more normal growth model, with a shift from over investment in the export sector to wage led domestic consumption. That will take time and the Chinese will have to manage the politics. Building some kind of welfare state and giving scope to unions are at least as important as the currency issue.
I agree with your statement: “Building some kind of welfare state and giving scope to unions are at least as important as the currency issue,” except I would say more important. The same could be said of the U.S. as well, sadly.
With their current account surplus the Chinese are investing massively abroad in the spirit of the British in the 19th century, or the Americans in the early 20th. Lots of construction projects, and all kinds of barter deals for raw material imports are going on in Africa, and Latin America.
Simon Johnson of The Baseline Scenario has done a mark-up of the G20 communiquÃ© for those interested in nuts and bolts.
Andrew- looks like George Soros seems to be on your side on this one. Weird how a lot of thinkers have been thinking about this China- USA thing all at the same time. I guess it comes with the G20 meeting and the currency bust up that has been going on now for quite sometime. That Yuan has not moved much over the years- and I will say this- there is something to be said for stability.
However some have been personifying this as old and new capitalism, and I do believe that is not at all what we are up against here, at least not as the main contributor of change. And I hate when people try and simplify that in the newspaper journalistic realm.
By the way, I can’t believe Derek Decloet made it to senior business editor- wow pretty sad I must say- we have had words and I was not impressed and never have been with anything that guy has to say in the GM, and that goes for the article Iglika posted above.