Beijing Only Has Itself to Blame for Stock Market Chaos

Even if the SCMP tries to make you think otherwise

Big Lychee , August 30, 2015 8:14pm

Greedy, evil America caused the current market mayhem unleashed from China.

Repeat until you are convinced. Scattered with subtlety here and there in the South China Morning Post, the notion hits some important pro-Beijing buttons, notably Chinese victimhood and Communist Party infallibility.

It seems to partly be a reaction to the anti-Chinese ravings of US presidential hopeful Donald Trump – apparently someone up there on the other side of the Great Firewall doesn’t get the joke and takes the clown-act literally. But mainly this is a patriotic distraction from the glorious motherland’s ongoing ‘challenges’: panicky leaders sense the economic game is up, while Tianjin port explodes and everyone pretends to rejoice that Vanuatu is turning up for this week’s Grand Anti-Turnip-Head Parade.

Can we trace today’s global gyrations in stocks, commodities and morale to Alan Greenspan’s policy as Fed Chairman all those years ago? Yes. It’s not disputed. Nor is it very interesting, or especially relevant. In fact, it’s a rehash of the fuss several years back, in which wastrel/consumer/debtor USA and mercantilist/saver/exporter/lender PRC blamed each other for the imbalances that, by definition, each could not have had without the other.

We can go further back. Why not blame the goldsmiths of medieval Italy? They held neighbors’ bullion for safekeeping, and noticed that people were using the receipts as cash. So the scoundrels started to issue more of these IOUs for interest – even though no-one had strictly speaking put any extra gold in the strong room. It was second only to the invention of sex. Or we could get right down to the root of the problem and blame those bastard Sumerians for thinking up wacko ideas like buying and selling grain that still hadn’t been grown.

Obviously, the US/Western culture of maxing out on credit cards and dumping it all on the next generation is reprehensible and not democratic civilization’s finest achievement. Obviously, Australia, Brazil and other resources producers will have to get new jobs now that China isn’t gorging itself on all the coal and iron on the planet. But equally obviously, China’s unfolding economic mess is the making of the Communist Party.

We all know the dilemmas they face in Beijing: the easy post-Maoist gains are over, and now they have to solve debt, bubbles, vested interests and potential social unrest, or lose any mandate to rule. It has come to this not because of weakness and indecisiveness – the curses of Western democracy – but because of the wonderful Beijing Consensus. It has happened because they are so accustomed to total, unquestioned control, and so wrapped up in their own Key Subliminal Messages and propaganda, that they couldn’t believe anything could go wrong. No-one else forced them into this. And saying it’s someone else’s fault won’t help.

Oh dear – somebody at the SCMP didn’t get the memo…


Big Lychee

Watching the sun set, little by little, on Asia's greatest city – with a dash of Hemlock.