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  • 建立时间: 2009-01-15
  • 更新时间: 2010-10-22




  • 谢谢你的温柔


    France's protests

    Where the streets have no shame

    The protests against the government’s proposed pension reform turn ugly

    THE strike-weary French have grown used to a day’s worth of infrequent trains, absent teachers, undelivered post and unprinted newspapers. This is the routine whenever unions hold a one-day strike, as they did (again) on October 19th, against the raising of the legal minimum retirement age from 60 to 62 years. But the petrol shortages, blockaded oil depots and schools, jammed roads, burnt cars and sporadic violence this week were of a quite different order. The shift from organised protest towards disorganised rebellion has put Mr Sarkozy’s determination not to back down to its stiffest test yet.

    The routine protests this week were mostly peaceful, even festive. Anywhere between 1.1m and 3.5m took to the streets, including leaders of the opposition Socialists, for the sixth day of protests this autumn against pension reform. This approached the previous week’s record turnout, although the strike rate dipped: from 40% to 30% at the national railway, from 19% to 12% among civil servants, and from 18% to 15% at EDF, the energy utility.

    But it was not marching protesters or striking train drivers who shifted the atmosphere so abruptly this week. It was the spreading petrol shortages, combined with improvised guerrilla protests: lorry drivers blocking roads in “Operation snail”, lycée students shutting down schools, protesters invading railway tracks and airports and vandals looking for trouble.

    This week workers at all 12 of France’s refineries were on strike and many oil depots were blocked, disrupting petrol supplies and prompting motorists into panic-buying. The government’s initial insistence that there were no petrol shortages was shown to be absurd, as drivers toured from station to station in search of fuel, or joined lengthy queues. Jean-Louis Borloo, the environment minister and aspirant prime minister if François Fillon is replaced, finally admitted that almost a third of the country’s 13,000 petrol stations had run out of fuel. Mr Sarkozy ordered the police to lift blockades of oil depots and ensure the resumption of distribution.

    At the same time, 379 lycées were disrupted or closed on October 19th by protesting school pupils, who in France have their own unions. Although not directly touched by pension reform, many pupils seem to think that, if 60-year-olds work for two years longer, they will have to wait two more years before they can inherit their jobs. More worrying than economic illiteracy, lycée protests are often used by casseurs, or vandals, as cover for troublemaking. In Lyon 1,300 casseurs, half of them under 18, rioted in the historic centre, torching and overturning vehicles, looting shops and smashing up bus shelters. A courthouse in Nanterre, west of Paris, was vandalised. In Le Mans, a junior high school was burned to a cinder.

    Mr Sarkozy declared that he would not let the country be “paralysed” by blockades or unrest. Nor, he said, would he back down on reform, because it was his “duty” to guarantee pensions for future generations. The pension bill has already been passed by the lower house, and voting in the upper house, although delayed this week, should conclude soon. The government is hoping that the French will tire of protesting, and that support for the strikes will ebb. Above all, schools break up on October 22nd for a ten-day half-term—and French unions like their holidays too much to disrupt them with strikes.

    Yet if they give up, the unions stand to lose credibility. National leaders, such as Bernard Thibault, of the communist-backed Confédération Générale du Travail, France’s most powerful union, are under pressure from their grass-roots not to cave in. Union bosses were due to meet on October 21st to decide what to do once the upper house votes. Some argue that protests should continue. The two chambers still need to vote on a final version of the bill, probably next week, before it becomes law. In 2006 student-led protests against labour-market reforms forced the government of the day to retreat, even after the bill had been signed into law.

    The difficulty for Mr Sarkozy is that pension reform has become a touchstone for general grievances. He and Mr Fillon have tried to explain the need for France to preserve benefits for tomorrow’s pensioners by lengthening working life. He has given some ground to the unions over the detail of the reform. But he is unpopular and distrusted. And he is linked in the popular mind with wealth and big business, an image reinforced by recent blunders in his ministerial team: cigars charged to expenses, a private jet hired by a minister, conflicts of interest tied to Liliane Bettencourt, the billionaire heiress to the L’Oréal empire. By contrasting the plight of “workers” facing two extra years of toil with the high life of the elite, the left has shamelessly whipped up a feeling of injustice about what is, in reality, a rather timid reform.

    The turmoil beamed out on French television screens this week could yet begin to turn public opinion, which has so far mostly backed the protests. Although 67% of respondents to one poll this week said they supported the routine strikes and demonstrations, 54% were against the blockade of oil refineries. The government is looking for an offer to make to the unions, unrelated to pension reform, that would allow them to save face. But if the rebellion fails to die down, Mr Sarkozy will be in a tight corner—and his plan to reshuffle the government after pension reform is done will have to be put off even longer.

  • 哪有清静之处


    How to stop a currency war

    Keep calm, don’t expect quick fixes and above all don’t unleash a trade fight with China 淡定,期望越大,失望越大,慢慢来,和中国开展贸易战划不来

    IN RECENT weeks the world economy has been on a war footing, at least rhetorically. Ever since Brazil’s finance minister, Guido Mantega, declared on September 27th that an “international currency war” had broken out, the global economic debate has been recast in battlefield terms, not just by excitable headline-writers, but by officials themselves. Gone is the fuzzy rhetoric about co-operation to boost global growth. A more combative tone has taken hold (see article). Countries blame each other for distorting global demand, with weapons that range from quantitative easing (printing money to buy bonds) to currency intervention and capital controls.近来几周,世界经济闹的沸沸扬扬,箭在弦上, 一触即发。自从巴西财政部长9月27号宣称“全球货币战争”已经打响,有关全球经济的争论又重燃战火,不仅是各大报纸的编辑们兴奋不已,各国政府官员也对此唇枪舌剑。此刻有关通力合作共同促进全球经济增长的声音早已抛掷脑后。各国之间开始相互指责对方破坏国际需求,可谓火药味十足,各国都摩拳擦掌,大量印刷纸币购买债券,采取货币干预以及资本控制等手段来应对“战争”。

    Behind all the smoke and fury, there are in fact three battles. The biggest one is over China’s unwillingness to allow the yuan to rise more quickly. American and European officials have sounded tougher about the “damaging dynamic” caused by China’s undervalued currency. Last month the House of Representatives passed a law allowing firms to seek tariff protection against countries with undervalued currencies, with a huge bipartisan majority. China’s “unfair” trade practices have become a hot topic in the mid-term elections. 说到底,所有的争论聚焦在三场“战争”。首当其冲就是在中国不情愿让人民币快速升值。美国和欧洲各国政府都对此态度强硬,认为人民币币值低估严重破坏了全球经济的动力。就在上月,美众议院两党已压倒性票数通过了允许公司对币值低估国家的商品增收保护性关税的提案。有关中国“不公平”的贸易措施成为了美中期选举的焦点所在。

    A second flashpoint is the rich world’s monetary policy, particularly the prospect that central banks may soon restart printing money to buy government bonds. The dollar has fallen as financial markets expect the Federal Reserve to act fastest and most boldly. The euro has soared as officials at the European Central Bank show least enthusiasm for such a shift. In China’s eyes (and, sotto voce, those of many other emerging-market governments), quantitative easing creates a gross distortion in the world economy as investors rush elsewhere, especially into emerging economies, in search of higher yields. 这第二场“战争”在于各发达国家所采取的货币政策,尤其是各国中央银行最近可能要重新印刷纸币购买政府债券。随着金融市场期望美联储进一步采取快速大胆的行动,美元持续贬值。而欧元则由于各大中央银行的行长无心对付这一改变而飞快升值。在中国看来,如此宽松的政策严重破坏了世界经济,因为投资者们都不断涌向别处,尤其是新兴经济体,以期望获得更多的利润。

    A third area of contention comes from how the developing countries respond to these capital flows. Rather than let their exchange rates soar, many governments have intervened to buy foreign currency, or imposed taxes on foreign capital inflows. Brazil recently doubled a tax on foreign purchases of its domestic debt. This week Thailand announced a new 15% withholding tax for foreign investors in its bonds. 第三个争论主要来自发展中国家如何应对处理资金流动问题。多国政府都采取干预的措施,购买外国货币,对外国货币流动增收税款,而不是快速提升汇率。

    Jaw-jaw, please

    For now, these skirmishes fall far short of a real currency war. Many of the “weapons” look less menacing on closer inspection. The capital-inflow controls are modest. In the rich world only Japan has recently resorted to currency intervention, and so far only once. Nor is there much risk of an imminent descent into trade retaliation. Even in America, tariffs against China are still, with luck, a long way off—both because the currency bill is milder than it sounds and because it has yet to be passed by the Senate or signed by Barack Obama. 现在看来,这些喋喋不休的争论远构不成一场真正的货币战争。细细看来,问题似乎不那么严重。对于货币流通的控制都还在人们的默许范围之内。发达国家中只有日本最近采取了货币干预的措施,至今为止也仅此而已。一触即发的贸易战更无法谈及。即使在美国,针对中国所增收的关税目前也只停留在口头上而已,有关货币法案既没有听起来那么火药味十足,参议员也还没有通过此项法案,更没有得到奥巴马总统的签署。

    Still, there is no room for complacency. Today’s phoney war could quickly turn into a real dogfight. The conditions driving the divergence of economic policies—in particular, sluggish growth in the rich world—are likely to last for years. As fiscal austerity kicks in, the appeal of using a cheaper currency as a source of demand will increase, and the pressure on politicians to treat China as a scapegoat will rise. And if the flood of foreign capital intensifies, developing countries may be forced to choose between losing competitiveness, truly draconian capital controls or allowing their economies to overheat. 然而我们并不能就此满足,因为这些争论很可能会演变成一场混战。

    What needs to happen is fairly clear. Global demand needs rebalancing, away from indebted rich economies and towards more spending in the emerging world. Structural reforms to boost spending in those surplus economies will help, but their real exchange rates also need to appreciate. And, yes, the Chinese yuan is too low (see article). That is hurting not just the West but also other emerging countries (especially those with floating exchange rates) and indeed China itself, which needs to get more of its growth from domestic consumption.

    It is also clear that this will not be a painless process. China is right to worry about instability if workers in exporting companies lose their jobs. And even reasonable choices—such as the rich world’s mix of fiscal austerity and loose monetary policy—will have an uncomfortable impact on small, open emerging economies, in the form of unwelcome capital inflows. This flood of capital will be less devastating to them than the harm they would suffer if the West descended into deflation and stagnation, but it can still cause problems.

    Collective Seoul-searching

    All this cries out for a multilateral approach, in which institutions such as the IMF and the G20 forge consensus among the big economies. The hitch is that the multilateral route has, so far, achieved little. Hence the chorus calling for a different line of attack—one that focuses on getting tough with China, through either retaliatory capital controls (such as not allowing China to buy American Treasury bonds) or trade sanctions. And it is not just the usual protectionist suspects: even some free-traders reckon that economic violence is the only way to shock China out of its self-harming obstinacy (and to stop a more widespread protectionist reaction later).

    This newspaper is not convinced. The threats look like either unworkable bluffs (how can China be stopped from buying Treasuries, the most widely traded asset in the world’s financial markets?) or dangerous provocations. Confronted with a trade ultimatum, the Beijing regime, puffed up in its G2 hubris, may well reckon it is cheaper politically to retaliate to the United States in kind. That is how trade wars start.

    Anyway, to focus on America and China is to misunderstand the nature of the problem. The currency wars are about more than one villain and one victim. Rather, redouble multilateral efforts behind the scenes, especially by bringing in the emerging countries hurt by China’s policy. Brazil and others have only just begun to speak out. South Korea is hosting the G20 next month. Use the Seoul summit as a prompt, not to create some new Plaza Accord (today’s tensions are too complex to settle in a grand peace treaty of the sort hammered out by just five countries in New York in 1985) but as a way to clarify the debate and keep up the pressure. It will get fewer headlines; but this is a war that is best averted, not fought.

  • 火星撞地球


    China and America

    The odd couple

    Oct 22nd 2009
    From The Economist print edition

    America should be much more confident in its dealings with its closest rival

    Illustration by Jon Berkeley

    IT HAS become a tedious tradition for Westerners dealing with China to garnish their speeches with wisdom from the Chinese classics. Barack Obama, addressing Chinese and American leaders in July, used not just a banal quotation from Mencius, a Confucian sage, but a punchier one from Yao Ming, a Chinese basketball player: “No matter whether you are new or an old team member, you need time to adjust to one another.” Though it is 30 years since the two countries re-established diplomatic ties severed by the Communist takeover, both sides still badly need to adjust.

    The heart of the problem is a profound uncertainty in both countries about where the relationship may lead. In many respects the two countries are in the same bed. Their economies have become interlocked, especially in the past decade. America is the world’s biggest debtor and China its biggest creditor. From climate change to the economic recovery, the world faces problems that demand China and America work in concert.

    Prussian blues, Chinese reds

    Yet relations are dogged by fears of a new cold war, or even a hot one, breaking out. Some Americans in Washington, DC, talk of China as “the new Prussia”. China has engaged in a rapid military build-up that could challenge America as the defender of Asian peace (and Taiwan’s sovereignty). Unannounced, China is building its first aircraft-carrier, yet its generals often refuse even to talk to their American peers.

    Underlying the strategic competition is China’s economic rise. Its companies are “colonising” swathes of Africa and Latin America, cosying up to regimes Westerners shun. Its huge foreign-exchange holdings and its sniffing of bargains mean Chinese investment in the West will grow rapidly in the coming years. And to cap it all, China owns $800 billion of American government debt—enough to give it power of life and death over the American economy.

    Tensions will get worse in the next few years for two reasons. The first is unavoidable: 2012 witnesses important political transitions in the form of elections in Taiwan and America and a Communist Party Congress in China. Second—and more generally—there has been a recalibration of perceived power. There is now talk of a G2 of China and America, implying that their global weights are nearly equal. In fact, as our special report argues, this is a misperception, and a dangerous one.

    China’s economy is still less than a third the size of America’s at market exchange-rates. Its GDP per head is one-fourteenth that of America. The innovation gap between the two countries remains huge. America’s defence budget is still six times China’s. As for the Treasury bills, dumping them is not an option for China: a tumbling dollar would hurt its own economy (see article). And as American consumers spend less, while Chinese stimulus boosts its domestic spending, the huge and politically troublesome trade imbalances are shrinking. In the meantime, the danger of overegging China’s economic expansion abroad is that it will fuel protectionism at a time when American unemployment is painfully high.

    In terms of geopolitical power, China has neither the clout nor the inclination to challenge America. Confidently though China’s leaders now strut the world stage, they remain preoccupied by simmering discontent at home: there are tens of thousands of protests each year. For all the economic progress, all sorts of tensions—social, cultural, demographic, even religious—haunt the regime and help explain why it resorts to nationalism so often. So it is odd, and wrong, that America’s approach towards China is driven by its own insecurities.

    To simplify enormously, the danger is that a frightened United States will be too tough on China over the economy, especially trade; and not tough enough on human rights. On money matters, Mr Obama’s foolish decision to slap tariffs on Chinese tyres has given dangerous encouragement to protectionists in America. As unemployment there climbs inexorably towards 10%, the pressure will grow for Congress to fuel a self-defeating attack on Chinese exports and the undervalued yuan. This is bad economics: both China and America would lose enormously from a trade war.

    If economic freedom is one American value that Mr Obama should not sacrifice on his first visit to China next month, the other is personal freedom. Chinese authoritarianism is not somehow more acceptable because China is a rising power; nor are human rights bargaining chips to be played only when expedient. That Mr Obama needs Chinese help to fix the global economy and on climate-change mitigation does not mean the leader of the free world should stifle criticism of its political system. Avoiding a meeting with the Dalai Lama in Washington this month was an unnecessary sop to his hosts. The Communist Party, keen to bolster its image at home, wants the trip to appear successful as much as Mr Obama does.

    Same bed, different dreams—and one is stronger

    A more confident approach is a bet on whose sort of system of government will prove ultimately stronger. At the moment China’s responses on the climate, the financial crisis and the emerging swine-flu pandemic have won it praise internationally. But they have also borne the hallmarks of an authoritarian system. For instance, on greenery, it is clear that if China had exposed its response to the rigours of democratic debate, it would have acted more slowly: China’s system enables it to mobilise huge resources and make politically difficult decisions. But an effective long-term response to climate change needs public understanding of the issues and a legal environment that allows foreign owners of green technologies to transfer them without fear of theft. China lacks both.

    Behind China’s façade of strength, on stunning display with its parade of tanks and missiles through Beijing on October 1st, lie fretful frailties—also on display that day, when spectators were banned for fear of protests. Social tensions in China are likely to rise, even as it grows richer. Locking up activists, as China has been wont to do recently, is not a lasting solution. Mr Obama should meet some of them in Beijing to find out for himself. If his hosts have a hissy fit, let them.

  • 在中国做生意


    Selling foreign goods in China


    Oct 15th 2009 | SHANGHAI
    From The Economist print edition

    Despite widespread hope that China will help pull the world out of recession, foreigners are finding it as arduous as ever to do business there


    EVERY year, says Paul French, head of Access Asia, a research firm based in Shanghai, the same company buys the same report from him on the market for a particular product in China. That is because each year the company in question sends a new executive to China with instructions to break into the local market, who soon departs in despair—having failed to find an opening given the (brief) time and (insufficient) resources allotted.

    Mr French’s customer is not alone. China accounts for less than 2% of the global sales of drugs giants such as Pfizer, AstraZeneca and Bayer, estimates IMS, another research firm. Procter & Gamble (P&G), a consumer-goods giant, is reckoned to generate only a bit over $3 billion annually in China, less than 5% of its overall sales. Unilever is thought to sell less than half as much; its local operations are barely profitable. AIG, an American insurance firm, was founded in Shanghai and has won greater access to China than many of its competitors. But its operations are still restricted to just eight cities. Analysts suspect its revenues in China are less than in Taiwan, a country with 2% of the population and stiffer competition.

    The promise—and frequent disappointment—of doing business in China has been a common theme since at least the 19th century, when weavers in Manchester were said to dream of adding a few inches to every shirttail in China. Thanks to recession at home, foreign firms are keener than ever to capitalise on China’s growth. But Europe and America’s exports to China have remained broadly flat over the past year and amount to less than 7% of the total, even though shrinking exports to other countries flatter the figure. Even if the Chinese economy grows by the official target of 8% this year, the impact on Western firms’ total sales would be little more than a rounding error, says Ronald Schramm, a visiting professor at the Chinese European International Business School.

    Many foreign firms, of course, are doing well in China, especially at the two extremes of the value chain: things like luxury goods, fibre-optic cable and big aeroplanes on the one hand, and oil, ores and recyclable waste on the other. But in between, both explicit legal impediments and hidden obstacles continue to hamper access to Chinese customers, despite China’s promises of reform when it joined the World Trade Organisation (WTO) in 2001. Publishing, telecommunications, oil exploration, marketing, pharmaceuticals, banking and insurance all remain either fiercely protected or off-limits to foreigners altogether. Corruption, protectionism and red tape hamper foreigners in all fields.

    Recent reports from three lobbies for foreign businesses, the American Chamber of Commerce in Shanghai, the European Chamber of Commerce in China and the US-China Business Council, bear out this gloomy view. Their biggest gripes have nothing to do with typical business concerns, such as the availability of good staff or high costs. Instead, they complain about subsidised competition, restricted access, conflicting regulations, a lack of protection for intellectual property and opaque and arbitrary bureaucracy.

    To operate in China, the Council itself must provide documents from America’s State Department, the Chinese Embassy in America, the cities of Washington and Shanghai, the local tax authorities and the local branch of the State Administration for Industry and Commerce. It takes six months to obtain a one-year licence. At least there is an established procedure, albeit a costly and cumbersome one. Others are not so lucky: upon joining the WTO, China agreed to allow foreign firms to compete to offer booking systems to local airlines, but according to the European Chamber it has not yet produced the necessary regulations.

    Local officials go to great lengths to protect companies on their patch, often by giving them preferential access to land or credit, or by easing bureaucratic constraints for them. All the red tape would at least provide plenty of work for multinational law firms, were they permitted to employ Chinese lawyers—which they are not. The government, by dint of its control of the media, also controls advertising rates. That makes the cost of reaching a consumer in China higher than in many Western countries, although the potential rewards are much lower since most Chinese are so much poorer, says Tom Doctoroff, the boss of JWT, an advertising firm. There is little reliable business news (see article).

    Firms that have managed to overcome these obstacles tend to produce locally in China; their products are perceived to be of high quality (few foreigners succeed by undercutting prices) and they have invested tremendous amounts of time and effort building distribution networks and raising awareness of their brands. Take Goodyear, an American tyremaker. It has had to find local partners for all of its 760 dealerships in China, who in turn had to obtain permits from the authorities. It has got around the state monopoly on advertising by deploying its trademark blimps, and pre-empted objections to that by using them to advocate a worthy cause: safe driving.

    As always, there are local tastes to consider too. Chinese consumers seem to have even more of a taste for variety than most. P&G produces its Crest brand of toothpaste in a mouth-watering array of flavours, including lemon, tea, strawberry, salt and honey. A similar proliferation of offerings has served Nokia, the world’s biggest handset-maker, well too.

    One strategy that has brought success to several foreign firms has been to charge high prices—a surprise, given that earnings in China remain quite low. A survey by the Nielsen Company concludes that Chinese believe that foreign brands are more expensive, even when they are not. That suggests that they should aim to compete on quality rather than cost. At any rate, Apple, General Motors and Levi Strauss all sell certain products at higher prices in China than elsewhere. So do many luxury brands. But relatively few foreign firms have managed to reap such rewards.

  • 奥巴马的独角戏


    Barack Obama and the Nobel peace prize

    Even greater expectations

    Oct 9th 2009
    From Economist.com

    Is it premature to give Barack Obama the Nobel peace prize, less than a year into his presidency?现在授予奥巴马诺贝尔和平奖是否为时过早,这位黑人总统入主白宫还不到一年。


    BARACK OBAMA, who has been America's president for just nine months, has won the 2009 Nobel peace prize. Perhaps the Nordic judges felt it was a suitable consolation after Chicago lost out to Rio de Janeiro in its bid to host the 2016 Olympic games. Or the prizegivers might have felt moved by Mr Obama’s personal story: that a mixed-race man is president says much about the peaceful progress on race relations in America. Instead they emphasised Mr Obama’s aspirations and his commitment to diplomacy, even if, so far, he has achieved little that is concrete. 才当了9个月美国总统的奥巴马,获得了09年诺贝尔和平奖。或许评委们觉得,芝加哥刚刚失去2016年奥运会主办权,在这个时候授予奥巴马诺贝尔奖是很合适的安慰吧。又或许是授奖者被奥巴马个人的经历所感动了:一位混血种的总统不断强调在美国的种族问题上要和平式的不断前进。他们讲到奥巴马本人对于外交的期望和他本人所作出的承诺,即使到目前为止,我们并没有看到他取得的具体的成就。

    Most broadly, he has sought to engage with opponents, saying that America would “extend a hand, if you unclench your fist”, for example to those who were earlier dismissed as an “axis of evil”. Somewhat to the discomfort of Iran’s president, Mahmoud Ahmadinejad, who had bolstered his domestic support by vilifying America as an aggressor, Mr Obama has proposed holding talks about nuclear affairs, removing a precondition that Iran first abandon enrichment of uranium. Mr Obama made withdrawal of American forces from Iraq one of the main pledges of his election campaign and has since overseen a slightly quicker run down of troops than was envisaged by Mr Bush. Towards North Korea, too, Mr Obama has dangled the prospect of bilateral talks and closer engagement.

    Regarding Russia Mr Obama has developed a policy of notably warmer ties, dubbed “hitting the reset button”. Relations had become especially frosty towards the end of Mr Bush’s presidency when war broke out between Georgia, an ally of America, and Russia. Since coming to office Mr Obama has also overseen talks aimed at reducing the nuclear arsenals of Russia and America, while speaking of his ultimate wish to “get to zero”—somehow ridding the world of all nuclear weapons. Most substantially (and to the dismay of the Polish and Czech governments), he has scrapped an earlier plan to deploy a missile-defence shield on land in eastern Europe, which had been seen as a provocation by Russia.

    Yet Mr Obama’s main achievement is a change of tone in foreign policy. A speech given in Egypt in June was an eloquent call for a new understanding between America and Islam. It was designed both to assure Muslims, now thought to number 1.6 billion around the world, that America is not set on a crusade. Similarly it was intended to convey to any Americans (and others) who believe in the notion of a “clash of civilisations” that friendly ties between religions is eminently possible.

    Similarly, American policy towards small and repressive regimes, ranging from Myanmar to Cuba, has shifted in mood, if not yet substance, by offering the prospect of engagement if governments demonstrate progress towards democracy. Some may also see Mr Obama’s push for more action to tackle climate change as a factor—he is urging Congress to pass a cap-and-trade bill and has said that his administration would decree new environmental rules if Congress fails to do so. (Al Gore, another Democratic figure, also won the Nobel prize, for his campaigns against climate change.)

    Yet critics will have plenty to complain about. The prize-giving committee was at pains to emphasise Mr Obama’s “extraordinary efforts to strengthen international diplomacy and co-operation between peoples”. In the citation, the committee argued that his “diplomacy is founded in the concept that those who are to lead the world must do so on the basis of values and attitudes that are shared by the majority of the world's population.” But is the award premature? Although the prize may be given in the spirit of encouraging Mr Obama’s government, it might have been better to wait for more solid achievements. With so many good intentions, and so many initiatives scattered around the world (and an immensely busy domestic agenda, including health-care reform and averting economic collapse), Mr Obama appears to be racing around trying everything without yet achieving much.

    One might point to Mr Obama’s lauded decision to close the military prison for terrorist suspects in Guantánamo Bay, and his explicit rejection of the use of torture by American spies and interrogators. Both are welcome, but for now Guantánamo Bay remains open. Carrying through on promises is proving far harder than making them. Similarly Mr Obama made progress in encouraging Israeli and Palestinian leaders to hold talks about peace earlier this year, but as he is distracted by other concerns both parties have since drifted away from negotiations. And so far North Korea, Iran, Cuba and Russia—among others—have offered nothing of substance to demonstrate that a policy of engagement will bring more results than Mr Bush’s tough line.

    More troubling is Afghanistan. Although the Nobel committee has now rewarded Mr Obama with a title of peacemaker (plus $1.4m or so), he remains a war president. He must shortly decide whether to deploy an additional 40,000 soldiers to fight against Taliban and other insurgents in a conflict that has lasted for eight years. With no obvious means of ending that war, there is a serious possibility that Mr Obama's presidency will become dominated by worsening conditions there.

    Mr Obama’s aspirations may be laudable, but he has several tough years ahead. The Nobel committee evidently wants to encourage him but it might have been wiser to hold judgment until he has achieved more. In America itself, the decision has already infuriated conservative commentators, ensuring there will be no peace on the home front, at least.

  • 朝核博弈


    China and North korea

    Putting a squeeze on

    Oct 6th 2009 | SEOUL
    From Economist.com

    China’s prime minister, Wen Jiabao, persuades Kim Jong Il to return to nuclear-arms talks


    NORTH KOREA'S ailing dictator, Kim Jong Il, rarely ventures to the airport to greet visiting foreign dignitaries. But China’s prime minister, Wen Jiabao, who departed from North Korea on Tuesday October 6th after a three-day visit, is no run-of-the-mill VIP. China has been North Korea’s staunchest ally through war and uneasy peace. Fraternal protocol demanded that Mr Kim greet Mr Wen on the tarmac not only with a vigorous handshake but also a prolonged hug.朝鲜领导人金正日很少去机场欢迎来访的外国政要,但是中国总理温家宝在结束了三天的访问星期二离开朝鲜的时候,却得到了这一贵宾级的待遇。中国一直以来是朝鲜最坚定的盟友。兄弟般的情谊需要金正日亲自去机场送别温家宝,俩人不仅紧紧握手还相互拥抱。

    Officially Mr Wen was in Pyongyang to celebrate the 60th year of diplomatic relations between China and North Korea. But since 1978 the two countries have pursued very different economic policies. China's markets are open to the world; North Korea remains in isolation and its economy is in terrible shape. As winter looms many North Koreans cannot feed or warm themselves. United Nations sanctions and a maritime blockade have squeezed the impoverished country further by cutting off North Korea’s most profitable export, weapons.温家宝此次平壤之行是为了庆祝中朝建交60周年。自1978年以来,两国采取了不同的经济政策,中国市场开始对世界开放,而朝鲜依旧选择孤立,自身经济陷入僵局。每当冬天到来是,很多朝鲜人民都没法解决根本的温饱问题。通过切断朝鲜最具盈利的出口产品--武器,联合国的制裁和海上封锁更是将朝鲜进一步推向了贫穷的边缘。

    Mr Kim desperately needs Chinese aid and Mr Wen obliged the North Korean, according to Chinese news reports. China’s prime minister signed a broad economic-assistance package with North Korea which has pledged to transform itself by 2012 into KanGsong Taeguk, a strong, prosperous and powerful country.金正日急需得到中国的帮助,而温家宝此行也正是来帮助朝鲜的。温总理此行与朝鲜签订了一系列有关经济援助的文件,将力图帮助朝鲜在2012年前转变成一个自强,繁荣,强大的国家。

    The package is perhaps in defiance of UN sanctions aimed at halting North Korea’s nuclear-weapons programme and missile development. But it may be a carrot intended to draw Mr Kim back into talks aimed at dismantling his nuclear arsenal. In this Mr Wen seems to have succeeded, albeit with a caveat. 这一系列文件与联合国制裁朝鲜核计划及导弹开发有所对抗,但这或许能让朝鲜重回谈判桌,以此来解散其核武器,从这点来看,温似乎已经成功了,尽管有点警告。

    North Korea’s official news agency says that Mr Kim expressed readiness to hold multilateral talks depending on the outcome of talks between North Korea and America. Mr Kim doubtless wants some of the same things from the Americans that he has got from China: economic assistance, a peace treaty on the Korean peninsula to replace the current armistice and diplomatic relations with Washington. The North Korean leader may want to bequeath to his successor, perhaps his third son, Kim Jong Un, an international environment that is less hostile to North Korea.

    James Steinberg, America’s deputy secretary of state, says his government is “prepared to have direct engagement with North Korea” if the regime returns to six-party talks with China, Russia, Japan, South Korea and America aimed at getting rid of North Korea’s nuclear weapons. These discussions are crucial to Barack Obama’s efforts to halt the proliferation of nuclear weapons. America wants to bring North Korea back into the nuclear non-proliferation treaty, which it left in January 2003. America’s president plans a nuclear-arms summit in March next year and he desperately needs a diplomatic breakthrough on North Korea. For several months his administration has been trying to convince Japan and South Korea to give their blessing to negotiations between America and North Korea.

    North Korea’s pledge to recommit itself to “denuclearising the [Korean] peninsula” has failed to impress the South Koreans. Hyun In-taek, South Korea ’s minister in charge of relations with North Korea, says “North Korea’s recent conciliatory gestures can be regarded as only minor shifts in attitude.” Another complication is that North Korea’s leader hinted that he may want Japan excluded from multilateral talks. Mr Kim is angry that Japan continued to raise the issue of the kidnapping of its citizens by his regime at the six-party talks.

    Mr Wen’s success in eliciting a commitment from North Korea to return to the six-party talks is evidence of its diplomatic muscle. North Korea had, just two months ago, described the talks as “dead”. China has long been criticised for not using its considerable influence to bring North Korea to heel for its nuclear weapons and intercontinental-missile tests. Mr Wen has apparently convinced North Korea to give some ground.

  • 巴西人的狂欢



    The Olympic games

    Rio’s sporting carnival

    Oct 2nd 2009
    From Economist.com

    Rio de Janeiro will host the 2016 Olympic games, the event’s first visit to South America


    THE founder of the modern Olympic games, Baron Pierre de Coubertin, insisted that taking part in the event was equally as important as winning. The gloomy delegations from Chicago, Tokyo and Madrid will find little consolation in the baron’s philosophy as they trudge from Copenhagen on Friday October 2nd. The members of the International Olympic Committee decided that the host city for the 2016 summer games will be Rio de Janeiro. 现代奥林匹克运动会的创立者,顾拜旦强调说能够参与比赛与赢得比赛同样重要。而来自芝加哥,东京和马德里的代表团在周五沮丧离开哥本哈根时并不觉得男爵先生的话对他们是多大的安慰。国际奥委会将2016奥运会的举办权给了里约热内卢。

    The delight on the faces of the representatives of the winner, Rio de Janeiro, equalled any beaming gold medal winner. A huge crowd of whooping cariocas greeted the news, relayed to a huge TV screen on Copacabana beach, with unabashed delight. The celebrations are well earned. Years of dedication and hard work go to moulding an Olympic champion and this is mirrored by the preparation needed to win the votes of committee members from every corner of the world. All four cities produced fat “bid books” explaining why they would be the best showcase and listing the projected costs of stadiums, roads and accommodation.来自里约热内卢的代表们脸上洋溢着的喜悦之情同得了金牌的运动员一样,非常高兴。

    The pre-tournament favourite was knocked out early on. Chicago, thought by many to be in the box seat, was surprisingly the first city to be eliminated, despite a visit to Copenhagen by Barack Obama. Tokyo followed soon after. Many developing countries are reckoned to have shown solidarity with Rio—and the event had never before been staged in South America. Madrid was thought to have only a slender chance mainly because the 2012 games will be in London. Tokyo may have suffered because the games would be held only eight years after Beijing triumphed, troubling those who advocate sharing it around more widely.

    Politics, supposedly, does not count either. Chicago, a town known for political machinations secured the personal backing of its adopted son, Mr Obama. He asked the IOC to “choose America” and to witness the “incredible diversity of the American people.” Chiacgo's resounding loss is something of a blow to his star power.

    The Brazilian city’s high crime rate may have counted against it with some delegates, but most will have concluded that Rio’s vibrancy will add to the allure of the games. And Brazilian enthusiasm for sports other than football will not have gone unnoticed—beach volleyball, a relatively new Olympic sport, is a Brazilian favourite. In fact the country will have a useful run at hosting a big sporting event when it stages the 2014 soccer world cup.

    But is staging the Olympics such a great coup? The pluses may seem obvious. Big building projects will employ lots of people who will spend their wages in the rest of the economy. Railways and roads will be built that might otherwise have stayed on the drawing board for years. Visitors will come from far and wide, either for the games or as tourists afterwards. That all sounds especially alluring in a recession.

    The pro-Olympics lobby tends to downplay the disadvantages. Building in the host city may push up wages and prices and crowd out investment elsewhere. Hurrying up building projects raises costs. What suits the games may not be best for the city afterwards. Not every visitor during the games is an extra one; tourists may time long-wished-for trips to watch the sport. Crowds or inflated hotel prices may deter others from coming.

    By and large, economists have found it hard to detect the benefits of big sporting events. Robert Baade, of Lake Forest College, near Chicago, describes the Olympics as a “high risk, low reward proposition”, but concedes that the games may prompt spending, say in transport, which boosts a region’s economy in the long term.

    The right event at the right time can give a city a lift: Barcelona, host in 1992, is a case in point. However, Stefan Szymanski, an economist at Cass Business School in London, suggests that hosting the Olympics may be a mark of recognition: the effect rather than the cause of change. If so that should also count as another reason for wild partying deep into the Rio night.

  • Reunification by trade?


    Taiwan and China

    Reunification by trade?

    Aug 6th 2009 | TAIPEI
    From The Economist print edition

    A plethora of free-trade deals is driving Taiwan closer to China

    Illustration by Claudio Munoz

    FREE-TRADE agreements (FTAs) are often contentious but rarely would one have as much strategic significance as that proposed between China and Taiwan. On July 29th Taiwan’s president, Ma Ying-jeou, elected last year on a platform of liberalising business restrictions and easing military tensions with the mainland, said a China-Taiwan trade pact should be signed as soon as possible. The two sides have quietly concluded months of unofficial negotiations and Taiwan’s economy minister, Yiin Chii-ming, says he wants formal negotiations to start in October. The island is in a hurry.

    Mr Ma is willing to take the political risk of tying a self-ruled democratic island economically to its giant authoritarian neighbour because of the rest of the world’s craze for free-trade deals. Taiwan has diplomatic relations with 23 countries. Most nations recognise China and fear to sign FTAs with Taiwan lest they incur China’s wrath. Already, says Huang Chih-peng, the director general of Taiwan’s Bureau of Foreign Trade, the world’s 230-odd bilateral or multilateral trade pacts are harming the export-dependent island’s economy.

    Mr Ma is even more worried about what will happen next year when trade agreements between China and the Association of South-East Asian Nations—so-called ASEAN+1—take effect. Taiwan’s exports to China face tariffs ranging from 5% to 15% and its government fears that, unless they are lowered, the island will be left at a competitive disadvantage in the giant Chinese market. This disadvantage would greatly worsen if a planned ASEAN+3 were one day signed, embracing South Korea and Japan.

    Economic benefits, political costs

    A think-tank commissioned by the government said the proposed pact could increase Taiwanese GDP by 1.65-1.72%—more if services and investment were included. In addition, it argued, the pact could increase foreign direct investment by $8.9 billion in seven years and create around 260,000 jobs (though other economists said this was too high). The president wants an outline agreement in place before ASEAN+1 comes into force, with the details worked out and implemented bit by bit after that. An incremental approach, officials say, is needed because an immediate FTA would be too disruptive to Taiwan’s economy.

    Disruptive is right, but not perhaps mainly to the economy. China still asserts that Taiwan is an integral part of the People’s Republic. Many Taiwanese, including the pro-independence opposition party, fear that the proposed accord is really a ploy by China to bring about unification by stealth. They also argue that once the pact is signed, there is no guarantee that China will not lean on members of other FTAs to keep Taiwan out anyway. In contrast, Mr Ma insists that the proposed pact would make it easier for Taiwan to sign free-trade accords with third parties.

    “It is a suicidal policy that makes Taiwan locked into China,” says Huang Kun-huei, the chairman of the pro-independence Taiwan Solidarity Union. In a sign of the popular unease raised by the pact, the opposition Democratic Progressive Party, which has virtually no parliamentary clout, still managed to collect over 120,000 signatories to a petition asking the government for a referendum on it (though Taiwan’s high threshold for referendum participation means that such a thing may not get off the ground).

    In fact, dramatic political shifts seem unlikely in the short term. Mr Ma has promised that when the deal is negotiated, the wording will not compromise the island’s political stance. And China-watchers think the increasingly sophisticated government in Beijing is not likely to make heavy-handed political demands in case this rebounds on Mr Ma and he is voted out of office in 2012 (the Chinese much prefer him to the independence-minded opposition). Nevertheless, in the long run China hopes that economic interdependency and goodwill will eventually encourage the island to return to the fold. The trade pact will be a test of whether that hope can be fulfilled.

  • Yes,we can


    A difficult summer for the White House

    Crunch time

    Jul 30th 2009
    From The Economist print edition

    The next few weeks could determine the fate of Barack Obama’s presidency

    IF THE opinion polls are to be believed, Barack Obama is now, six months into his presidency, no more popular than George Bush or Richard Nixon were at the same stage in theirs. His ratings are sagging particularly badly with electorally vital independent voters: two-thirds of them think he wants to spend too much of their money. Two of the most specific pledges he made to the electorate—to reform health care and to produce a cap-and-trade system to curb greenhouse-gas emissions—are in trouble. And an impression is being formed in Washington of a presidency that is far too ready to hand over the direction of domestic policy to Congress; that is drifting either deliberately or lethargically leftwards; and that is more comfortable with lofty visions than details. On the campaign trail Mr Obama showed an impressive ability to change gears. He needs to do so again this summer.如果民意调查可信的话,那么如今的奥巴马,在入主白宫六个月后,并不比同时期的小布什或尼克松更受欢迎。他的支持率在民众中慢慢下滑,尤其是在那些至关重要的独立选民中:他们中的三分之二都认为总统将要大量花掉他们手中的钱。奥巴马当初向选民许诺下的两个最重要的诺言:改革医疗健康体制和减少温室气体排放,如今都陷入困难中。如今在华盛顿,人们渐渐形成这样的看法:本届总统任期远没有做好将制定国内政策的权力交由国会管理,总是时不时的偏离轨道,并且更倾向于高瞻远瞩的眺望,而不是实实在在的拿出改革的措施。在竞选总统期间,奥巴马就显示出了寻求变革的能力。如今,这个夏天,他需要继续这么做,继续寻求改变。

    His cause is by no means hopeless. Just as his initial Messianic polling numbers were misleadingly optimistic, his problems should now be put into context. Most obviously, nearly 200 days into office, he has avoided making any horrific mistakes, especially in the fraught business of economic policy. On the hardly insignificant matter of restoring America’s reputation in the world he has delivered a degree of what he promised (though even there the tough times are still ahead of him, as our next leader makes clear). He has had to cope with the worst recession for half a century. He has been curiously ill-served by a press short of useful criticism, with liberal America prepared only to debate what sort of water he walks on best, while conservative radio hosts argue over when exactly he became a communist. And of course, government is darned hard: even when you make the right decision—to close Guantánamo, for instance—it can take years to put into effect.如今奥巴马的总统事业并非一筹莫展。就如同当初Messianic的选民过于乐观一样,现在他必须切实的解决他所面临的这些问题。很显然,在入主白宫200多天以来,奥巴马并没有犯下任何严重的错误,尤其是面临如此多关于经济政策的事务。为了在全世界重新建立美国的声望,他向人们传达了他所许下的诺言。他必须面对解决的是五十年以来最严重的经济危机。他被一群缺乏真知灼见的媒体好奇包围着,而自由的美国人仅仅满足于讨论他到底支持哪一边更好,而保守的电台主持人则在争论他究竟什么时候会变成共产党人。当然,政府也很为难,即使是做出正确的决定,比如说关闭关塔那摩,但那也得几年才能看到成效。

    So Mr Obama’s underperformance is relative and partial; but it is serious, especially in domestic policy. And if his schemes at home come to naught, then his credibility abroad will wither. That is why the next few weeks are crucial.所以说奥巴马并不如意的所为只是相对的并且是一小部分的。但是也很严重,尤其当涉及到国内政策的时候。如果他在国内实行的政策没有作用的话,那么他在国际社会的信用度也将下滑。这就是为什么未来几周对于他来说尤为重要。

    Taking too much care of Hillarycare

    In foreign policy an American president enjoys the most freedom of operation. At home the man in the Oval Office is mightily constrained by Congress. It is the artful combination of arm-twisting, compromise, rhetoric and gritty attention to detail that make the difference between an FDR and a Jimmy Carter. Back in his honeymoon days Mr Obama was constantly compared to Roosevelt. No longer.

    The suspicion is that the president has taken the experience of Bill Clinton too much to heart. The previous Democratic presidency got off to a rocky start for many reasons, but his failed attempt to impose health-care reform on Congress in 1993-94 bulks largest. Putting Hillary Clinton in charge of an unwieldy, secretive task-force that attempted to present powerful senators with a masterplan backfired. Congress promptly shot it down—and Mr Clinton lost both the House and the Senate to the Republicans in 1994.

    A president plainly should not ignore Congress. But Mr Obama has veered to the opposite extreme. Although he has a White House stuffed full of first-rate policy wonks, he has repeatedly subcontracted the big decisions—the $787 billion stimulus bill, cap-and-trade, health reform—to the Democratic leadership in Congress. At times Mr Obama’s role has seemed limited to deploying his teleprompter-driven oratory to sell whatever Congress proposes to the public, even before it is clear what exactly those proposals amount to.

    Nobody voted for President Pelosi

    Worse, the plans have usually ended up running away from tough decisions. With the stimulus bill the flaws were forgivable: there was an urgent need to give the economy a boost. But the House of Representatives has produced a cap-and-trade bill that is protectionist, riddled with exemptions and which gives away the permits that are supposed to force carbon-emitters to change their ways. There is a growing danger that this bill will not be passed through the Senate and reconciled with the House version in time for the Copenhagen summit on climate change in December.

    With health care, Mr Obama’s preference for vague statements of principle rather than detailed specification has led to a House proposal that loads taxes onto the rich, sets up a state-run insurance scheme that many fear will put private-sector providers out of business and fails to contain, let alone reverse, the escalating costs of treatment while adding an expensive requirement that everyone have health insurance, with large subsidies where needed (see article). Barely any Republicans could support this proposal as it stands. Frantic efforts to save the reform effort are under way in the Senate, but it is distinctly odd to note that the president’s signature policy is now being devised for him by a gang of six senators. Financial regulation is also stuck (see article).

    A policy of ramming bills through Congress on a party-line basis might suit Nancy Pelosi, the Democrats’ leftish leader in the House. But, from Mr Obama’s point of view, it is bad politics in two different ways. It is shifting the presidency to the left, annoying centrist voters who worry about the swelling government debt. And it may not even get the bills through. Conservative Democrats, many of whom represent right-leaning states and districts recently captured from the Republicans (see article), are nervous about backing bills without bipartisan support. Over 40 of them broke ranks in the House over the climate-change bill. Now there is the likelihood that health reform, like the climate-change bill, will be deferred until the autumn, when fears about the deficit will have grown and the two expensive bills could combine to spook voters.

    What should Mr Obama do? He must come down from his cloud and start leading. The House Democrats could be usefully reminded that their present 78-seat margin owes everything to the president’s coat-tails; they are endangering his popularity. Mr Obama should also court centrist Republicans. That means getting into the nitty-gritty: Republicans can hardly be expected to save Mr Obama’s presidency unless they get something solid in return. For instance, one way to pay for bringing the uninsured into the health-care system (a noble Democratic priority) is to scrap a distorting tax-deduction that veils the true cost of health insurance, a policy espoused by John McCain last year. A real “post-partisan” president would be trying to bully through this compromise, not talking dreamily about wanting health care for all at no cost to anybody but the rich. And on the subject of detail, precise talk from the president about how he intends to grapple with government debt would reassure a lot of centrist waverers.

    None of this is impossible. As The Economist went to press, hopes were rising that the Senate finance committee might soon produce a bipartisan version of the health bill. But then the final version of that bill will have to be reconciled with the much-worse House version. If the result is another lazy deficit-boosting, hard-decision-avoiding scheme (like George Bush’s rotten Medicare bill), what president would want to be remembered for that? Mr Obama remains an inspiring figure. But he needs to get his hands dirty this summer if he is to rescue a presidency that has started to slip.


  • 路漫漫其修远兮


    Uncertainty in the year ahead

    Jul 28th 2009
    From the Economist Intelligence Unit ViewsWire

    China's economy should grow by 8% this year and next, but significant risks remain中国今明两年的经济将以8%的速率增长,但前进中仍旧存在很大的风险。

    The Economist Intelligence Unit has revised its economic forecasts for China in 2009-10, and now believes that the country will achieve 8% GDP growth in both years. With real GDP growth having reached 7.9% year on year in the second quarter of 2009, China already appears on course to achieve the government's aim of 8% average growth this year. However, growth in 2010 remains subject to significant upside and downside risks. The outlook is obscured by the dominant role that government policy is set to play next year, and by the high degree of uncertainty with regard to the outlook for the global economy.经济学人情报组最近修改了其对中国今明两年的经济预测,并且认为中国今明两年的GDP增长将会达到8%。今年二季度中国的GDP同比增长7.9%,现在正在向政府所期望的8%的年增长率靠近。但是,2010年的经济增长仍然受到各种风险的挑战。由于明年政府政策的主导以及世界经济的极度不确定性,前景一片模糊。

    Our forecast for next year reflects an assumption that the government will tighten credit and fiscal policy moderately. Such an approach would be likely to have negative side-effects. Asset-price inflation will be stimulated by a credit and fiscal policy stance that will be kept loose to offset the effects of the weak global economy on the export sector. Several local governments in China will face growing fiscal strains that may require the central government to bail them out. China's fiscal deficit in 2009-10 will in any case be larger than at any point since the start of the reform era in 1979. Coupled with this, the banking sector will face a tough challenge. If economic growth is not to slow sharply in 2010, credit will have to continue to grow strongly. Yet coming after the extraordinary rise in lending seen in 2009, a further massive expansion of credit would increase the threat of loans turning bad and of a future banking-sector crisis. Such a crisis would require another recapitalisation effort by the central government, putting additional strain on China's public finances.我们在对明年经济形势的预测做出了假设,认为中国政府将要适度紧缩信贷以及财政政策。如果这样的话,将可能会造成负面的影响。为弥补低迷的世界经济对出口行业所造成的影响而采取的较为宽松的信贷和财政政策将会促进资产价格通胀。一些地方政府将会面临增长的财政负担,并且可能需要中央帮组其摆脱困境。中国2009-10的财政赤字将会是改革开放以来的最高峰。与此同时,银行业也将面临严峻挑战。如果要保证经济增长不会在10年大幅下滑,那么信贷就必须继续大规模增长。但是如果银行的借贷如果继续大幅增长的话,那么坏贷的风险也将加大,并且会导致今后银行业出现危机。如果危机爆发,那么中央政府就又得重新进行资金的分配,这将会给财政带来更艰巨的负担。

    Should the costs of the government's policies become too high (for example if consumer price inflation were to accelerate), or should China's tendency towards fiscal conservatism reassert itself (perhaps as the central government sought to enforce its authority over provincial leaders), our forecast for 2010 could prove optimistic. A sharper tightening of policy would see infrastructure spending slow and could bring to an early end the recovery in housing investment. The loss of business confidence and the adverse effects of such measures on the job market would undermine private-sector investment and consumer confidence, and GDP growth in the year would be likely to fall below the forecast level of 8%. However, for this very reason the government will be reluctant to adopt such an approach.

    It is also possible that GDP growth in 2010 could be higher than we forecast. The strength of housing and car sales in the second quarter of 2009 suggests consumer confidence has recovered more quickly than expected. In addition, with domestic demand in 2009 proving much stronger than most analysts had forecast, especially in key industries such as automotive manufacturing, many companies are already operating at full capacity and are planning to increase investment. This is creating a positive cycle of employment generation and demand growth, which if sustained in 2010 could offset a slight tightening of policy by the government. It is also possible that the external picture may prove less gloomy than we currently expect. This would provide a substantial boost to China's economy as the export sector revived. However, if the upside risk scenario for economic growth becomes a reality, businesses in China are likely to see considerable cost pressures re-emerge, with land and wage costs accelerating quickly.

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