Last Friday, Li was reported to have said that growth could fall as low as 7% — that’s a full one percentage point lower than Australia’s Treasury forecasts — for the next couple of years. Xi said: “We should never judge a cadre [a member of the Communist Party] simply by the growth of gross domestic product.”
Cadres are judged on guanxi (“personal networks”) and attracting investment and economic growth. But this is changing as people grow angrier about the environment — Beijing’s air pollution is into ultra-dangerous territory again, and polluted rivers, chemical factories and the rapidly diminishing water table are all major concerns.
In all, it’s been an extraordinary couple of weeks in China. As well as the bank wobbles, and doom-laden economic data, Xi has launched a “mass line” campaign aimed at cleaning up his corruption-riddled Communist Party.
At an unprecedented four-day meeting of the Central Committee of the Party’s Politburo — the top 23 men and two women in the 85 million-strong organisation — Xi told his comrades they must “strictly abide by party discipline and act in strict accordance with policies and procedures”. He warned darkly they should “strictly manage their relatives and their staff and refrain from abuse of power”.
In 2009, Rudd ramped up spending to help dodge the GFC. Rudd splurged about $50 billion — government spending went from $272 billion in 2007-08 to $316 billion in 2008-09. That was the borrowed dividend of the once-in-a-generation mining boom spent on Chinese flat screen televisions. Kicking the can down the road.
The relentless economic gloom from China is particularly bad news for our two single biggest earners, iron ore and coal, as demand falters while fresh supply comes on-line.
“[The first half] of 2013 saw prices of Australian-origin coking coal continue the weakness evident after the third quarter of 2012. Unsurprisingly, coking coal prices mirrored the collapse of iron ore prices, in a climate of poor conversion margins and weak finished steel prices in China. Quarterly negotiated prices slumped by -24.5% between Q3 and Q4,” the Steel Index report said yesterday. Ouch.
As well as flicking the switch to economic fear and loathing, Rudd is also invoking his record as an economic saviour. This time there’s no money in the tin and no Chinese stimulus to gild the lily.
Rudd mapped out the next steps in the economy this way: “New challenges in productivity. New challenges also in the diversification of our economy. New opportunities for what we do with processed foods and agriculture, in the services sector, and also in manufacturing.”
Chinese investment is something upon which the Coalition has struggled to come to a united, credible position. Rudd, on the other hand, in preparation for a possible return to the top, has been furiously working to repair his tattered image in Beijing over the past year, making multiple visits which often doubled as speaking engagements.
This article first appeared on Crikey.
