China Premiere Wen Jiabao has a piece in today’s Financial Times about China’s economy. He says in the article (most of which is behind the FT’s paywall, grr!) that China is capable of sustaining fast economic growth and that it has brought inflation under control.
Business Insider sees the piece directed at America. Wen says that China is putting $618 billion of investment in science and technology as well as building infrastructure and expanding the social safety net. The implication BI’s drawing is that while America is cutting those things and struggling economically, China’s doing them and thriving.
However, the piece is more likely for a European audience, since right when it was published, Wen left for an official visit to Hungary, Germany and Britain. Europe’s financial crisis hit harder than in America with some countries like Greece defaulting on its debt (the US could do that in the next few months) and governments responding to the crisis with austerity – a move that’s resulted in riots in places like Greece, Britain and France.
Wen’s line that China has successfully reined in inflation has already had an effect on the Chinese markets. Stock futures rose after the news broke this morning. The optimistic speculators probably didn’t see the reports last week about China’s inflation hitting a 34 month high.
Keep an eye on those inflation reports, as the positive reports might turn out to be false. And if it is, a lot of giddy folks excited now are going to get a rude awakening.
By Robert O’Connor