kelaido

China: Will Rising Unemployment Cause Policy Missteps?

Isnt there an easier way around all this? Prince Alwaleed stepped in to buy a small stake in Citibank in 1990. That not only saved Citibank, its stock price, but also probably saved the stock market. Stock market must stabilize before the economy can turnaround, before the US consumers increase consumption, which in turn induces more Chinese consumers to increase consumption. Inflation will be a problem but that is secondary. China can buy the whole of Citibank for US$25 billion and some change. Just 5% of her fiscal stimulus package, and pocket change in her USD reserve..

Left on their own, Chinese consumers will not signifcantly or artificially spend more. Chinese like to save in the best of time, what more during periods of uncertainty? To spend more, recklessly will simply put China on the same path as the US towards credit disaster. If the Chinese govt want more local consumption to spur employment, they can just very simply buy all the slack capacity in the export industries and give the manufactured products to the citizens. No different from the US govt giving $600 to each voter (Greencard holders dont qualify), but quicker path to the end result.
Whichever path, buckle up!