China’s capital market trouble is now all over the
headlines. Despite being at the center of mockery by the Feds in the US, Beijing’s
economic convulsion is affecting markets everywhere — and this gloomy story
should put some breaks to the West’s China-bashing indulgence for this issue
will affect them just as badly.
Although it is too early to point to a specific cause for
the global ‘panic’, Western outlets are already spreading the blame on China’s
recent currency devaluation, a policy implemented to beat lower market expectations
for its economy.
For a while now, China’s economic team have figured that the
way forward is to pivot away from exports and investments and instead focus on
a consumer-driven economic activity. But this rebalancing has had the effect of
less industrial output, and thus led to the propping-up policies. What followed
was the devaluation of the Yuan to help China maintain its manufacturing
competitiveness.
This policy has caused problems for analysts in the West where
they insist that China is playing the currency manipulation game. But guess
what? Since the 2008 financial crisis, Washington has repeatedly printed moremoney (euphemistically called Quantitative Easing) to artificially manufacture
‘recovery’, the consequences of which have helped undercut global competition.
The US Federal Reserve has a problem with China’s currency
devaluation policy, but not with its own reality-distorting stimulus. Not many realize that this inflated
money-printing policy is actually just a bubble: zero interest rates have artificially
propped-up the US economy. That is why those in the know worry what may happen
once the Feds take away zero percent interest rates (running for 7 years now). Once this fake shroud blows away, the United
States will be sent back to recession once more.
According to Western market ‘analysts’ and commentators,
China’s present capital market strain has caused people to panic. But who are
those people anyway? They are the investors and analysts who recklessly took risks that
led to the 2008 financial meltdown and then quickly spread the propaganda of
economic recovery.
They are the same people who always screamed wolf on
everything Chinese. As they see it, Beijing’s present trouble presents an
opportunity to further deepen the country’s political chasm anyway. Indeed, in their view, economic woes translate
to more political accountability, which in turn gives way to mass discontent. It
will be only a matter of time before we see Western media headlines cry Occupy
Hong Kong 2.0, but on a much larger scale this time.
