FLUSHING, New York—On October 19, the Committee for recalling New York City Councilmember John Liu and New York State Assemblywoman Ellen Young held its 8th symposium in Flushing, New York City.
Chinese economist He Qinglian spoke at the seminar, entitled “The Global Financial Crisis and China’s Economic and Political Development.” She talked about how China blames the United States for its economic hardships, how there really isn’t a viable crisis in the United States and that the United States will recover from this supposed fall, while China may not.
He Qinglian illustrated, with extensive facts, that the Chinese economic crisis began before the global financial crisis occurred.
She said, “The Chinese Communist Party (CCP) seized the moment to point fingers. They quickly tried to show how functional and workable the dictatorial economic system has proven to be through the histories of China and Russia, while denouncing the American-style free market system for its own supposed defeat.”
According to He, in the United States, this crisis has affected its virtual (derivatives, swaps, etc.) economy, especially in the financial and home loan markets. The recovery of the American economy is expected to get underway soon. China, on the other hand, was facing real trouble in it's material (goods, services, merchandising, etc.) economy and they have even more problems in their financial and real-estate markets. So there is no comparison between the financial crisis in America and the economic crisis in China.
The following are excerpts from He Qinglian’s speech:
CCP Practices Deception Amidst Cooperation
The financial crisis in the United States has reverberated around the world. More surprisingly, China may not be dramatically affected by the U.S. financial crisis, unlike Japan and some European countries.
The Chinese communist regime reacted in a crafty way.
The CCP has had two different approaches in the way it speaks about the repercussions in China by this international crisis. For example, during an interview with CNN, China’s prime minister Wen Jiabao made it clear that China would do its best to work together with the United States at this difficult time because China holds one trillion U.S. dollars in U.S. securities.
The next day media reports around the world quoted his statement, but strangely his statement did not appear in any newspapers or websites in China. Reports only covered statements centered on “opposing Taiwanese Independence.” To say the least, the CCP only seemed to take some corporate measures after the U.S. government approved a $700 billion rescue plan followed shortly thereafter with other European countries taking steps to resolve the crisis.
China’s central bank immediately announced a decrease in its three-pronged rate, which includes the interest rate, the bank reserve ratio, and the bank loan interest rate. So, the United States and Europe should be pleased with such cooperation by the Chinese authorities.
China has never been one for cooperation, especially regarding human rights issues. Because of this, it’s cursed by nations around the world. So now, everyone is somewhat relieved by the Chinese authorities’ apparent cooperation. What they fail to see, however, is what is going on behind the scenes. The Chinese authorities turned right around and are now blaming China's entire economic crisis on the United States.
Chinese Regime Blames U.S. for the Subprime Lending Crisis
Newspapers in China have been publishing numerous series of articles that examine the problems in China’s real estate, stock market, and banks. These reports state that the root cause has been the U.S. financial crisis. They also state that China suffers additional losses from purchasing U.S. Treasury bonds. In fact, China’s stock market crises happened last year and the years before. The real-estate market first crashed in 2005. It was predicted that China would have an economic crisis.
One report said that 90 percent or more of Shanghai’s real-estate market was supported by foreign investors. It is no wonder their markets crash. Since no government’s real-estate can rely soley on foreign investment. Everyone knows that China’s real-estate is going through a desperate time. All the business tycoons know of the hardships yet to come. This seems to be a case of “shift the blame,” since they accuse the U.S. subprime lending crisis of being the cause.
China also suffered a wave of bankruptcies this past year. Tens of thousands of China’s export companies went bankrupt. In Zhejiang alone, there were around 67,000 bankruptcies, which has been also blamed on the U.S. subprime lending crisis, which has, in reality, only affected it very little, if at all.
Actually, the main reason for this is that many overseas nations had boycotted Chinese products.
Toys manufactured in China were found to pose a great risk as it was discovered that they contain large amounts of toxic lead. Since a number of other raw materials used in China also contain toxic ingredients, China’s products have been boycotted by many nations around the world. As a result, the amount of exported goods declined dramatically and many businesses were forced to shut down. Since January 1, China increased export taxes between 12 to 15 percent, thus minimizing profit margins. However, the Chinese regime yet again blames this on the U.S. subprime lending crisis.
A Conceited Dream
What's most surprising is the CCP has been patting itself on the back. It boasts that the Chinese and Russian models supposedly prospered, while stating that the financial crisis in the United States is due to its impoverished free market system and that its well-established freedom and democracy have collapsed. Then what is the Chinese model? Totalitarian dictatorship stimulates a market economy?
The CCP-controlled newspaper in Hong Kong, Wenhui bao, published an article that examined the free market economy promoted by the former U.S. President Ronald Reagan. Reagan was president during the critical period of the Cold War which ended with the collapse of the Soviet Union and the end of the arms race. In the United States, Reagan is regarded as a hero. Now, the CCP blames Reagan for the financial crisis because he promoted less government regulation of the economy.
There are indeed many problems in the world due to this financial crisis. However, this doesn’t mean that the Chinese model should replace the American model, and this doesn’t mean a bankruptcy of the free market system either. Although Americans currently feel terrified, I personally think the U.S. real economy is going well. The consumer price index (CPI), which is the most widely used measure of inflation, is normal. The balance between family income and expenditures in the United States is good. High-tech and other industries are all normal. Major problems are only in the virtual (hypothetical) economy related to financial derivatives, especially home mortgages. After the recovery, everything will gradually return to normal.
Exhaustion of the Labor Force
However, serious problems exist in China’s economy. China's economy is export-dependent, with 60 percent of its products sold abroad. Therefore, if there is a recession in the exporting industry, its position of the world's factory is at risk.
Second, the Chinese world factory is not the same as the one of the United Kingdom which, during the industrial revolution, had the world's most advanced technology and led in developing manufacturing trends for centuries.
Chinese factories are labor-intensive and produce low quality products. Even when producing television sets and refrigerators, they still need to import key components. In other words, at best, China is an assembly workshop which has developed at the expense of the country's environment and the exhaustion of its labor force. China hasn’t grasped core technologies and the standard of its real economy is not very high.
Part Two of this article will be published shortly.