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Can Anyone Hold the Global Economy Together? Trapped between an erratic Trump, dysfunctional Europe &authoritarian China

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Don't miss this informative essay by this economist on what you must know about the financial policies which will determine our economic future 'There’s an unavoidable question: What are the political consequences of a growing reliance on Beijing’s control over the Chinese economy? The eurozone is perched on the edge of a recession — a hard Brexit will make matters worse — but a sharp slowdown in Germany means that the interests of North & South are actually aligned.   The Trump administration — and the Republican Party — threatens the institutions of economic policymaking in the U.S. Historically, it’s been radical governments that elicited a hard line from conservative central bankers. It’s extraordinary that this possibility is now being canvassed in what remains the heart of global capitalism.'
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I began teaching in 1963,; Ba and BS in Education -Brooklyn College. I have the equivalent of 2 additional Master's, mainly in Literacy Studies and Graphic Design. I was the only seventh grade teacher of English from 1990 -1999 at East Side (more...)
 

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Important facts that reveal the reality: "The fact that the world has not yet tipped into recession must in large part be credited to China. This is not to impute superhuman powers or monolithic unity to Beijing. The Chinese government has its hands full managing a nasty combination of slowing growth and a dangerous credit boom. China's shadow banking sector is a worry, as are the country's growth-addicted regional governments. China's corporations piled up cheap dollar debt and are now subject to the erratic upward trajectory of the dollar. And behind the scenes, there are persistent rumors of tension between President Xi Jinping's clique and that of Premier Li Keqiang.

And yet, in handling both its internal and external problems, China, unlike the United States, at least appears to have a playbook. It is not only synchronizing fiscal and monetary policy but is also using banking regulation and foreign exchange controls to contain the risk of capital flight. Once criticized for resisting the upward pressure on the value of its currency, Beijing is now expected by Washington to pull every lever to stop the yuan from devaluing. And even setting aside the contradictory noises from the Trump administration, there are few in the West who would want to see China liberalize its balance of payments and risk the kind of capital flight that rocked global financial markets in 2015 and 2016.

Tightening economic controls is the opposite of how Western pundits once imagined China's integration into the world economy. But it is a tool kit that served both Beijing and the rest of the world well by preventing a further downturn. Though the West still pays lip service to the cause of "market reform," it has come to depend on Beijing's maintaining its grip. But there's an unavoidable question: What are the political consequences of a growing reliance on Beijing's control over the Chinese economy?

The question could be dodged when it was assumed China would converge with the West. Now both parties in Congress pose it in geopolitical terms key Democrats have pivoted to viewing China's economic growth as a threat to American security. The repression in Xinjiang poses the question as a human rights issue; the turmoil in Hong Kong raises the stakes. The world watches with bated breath to see whether Beijing will use force to stamp out Hong Kong's remaining autonomy.

Even if a bloody showdown is avoided, the outlook is disconcerting. Beijing has made clear with its bullying of the management of Cathay Pacific that Hong Kong-based multinationals are no longer exempt from Chinese pressure. Large corporations that chose to locate in Chinese territory and profit from China's growth will be expected to play by the Communist Party's rules.

The prospect of a world economy divided among a sclerotic Europe, a nationalist United States and an authoritarian China is a gloomy one.

Submitted on Tuesday, Sep 3, 2019 at 6:28:56 PM

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