Executive Intelligence Review


Serious Discussions of Economic Policy Are Underway in China, U.S., and Russia

Oct. 3, 2018 (EIRNS)—In China, the United States and Russia, there are serious discussions going on about the nature of the current international economic crisis, and of some of the policy alternatives available—although they generally fall short when it comes to the required fundamentals of physical economy provided by Lyndon LaRouche, without which a viable alternative to the current crisis cannot be organized.

Take the case of an op-ed in China Daily by Zhang Yansheng, the chief economist at the China Center for International Economic Exchanges, headlined “Globalization Has Reached a Turning Point.” In it, Zhang pays lip service to the supposed recovery of the world economy since 2008, as measured in GDP, but he warns that despite that

“the risks, rather than declining, have increased significantly.... The liquidity resulting from the quantitative easing policy in the developed economies has not boosted their domestic consumption or investment. Instead, it has entered China [and other emerging economies] on a large scale, appreciating the currency and raising the prices of real estate and other assets.”

Zhang describes the reverse carry trade that threatens a blowout:

“But now that developed economies such as the U.S. seem to be recovering, it is likely that the bubbles in the emerging economies will burst. After the U.S. economy entered a period of recovery [sic] in 2015, it abandoned the quantitative easing policy and started raising the interest rate, with the resultant appreciation of the U.S. dollar leading to a large inflow of global capital into the U.S. triggering a new round of global economic shock.”

Consider an article published in the Oct. 1 South China Morning Post titled “Trade War Could End if China Commits To Helping Trump Make America’s Infrastructure Great Again,” written by William Mundell, a U.S. entrepreneur and producer of a documentary seeking to improve U.S.-China understanding titled “Better Angels.” Unfortunately, Mundell couches his argument on trade in terms of popular arithmetic notions of trade surpluses and deficits—rather than rising or falling technological platforms producing those trade flows, as with London’s lose-lose NAFTA atrocity—but he does make a useful policy proposal. He says that the only way to achieve an “enduring resolution to the trade war” between the U.S. and China is with a “fundamentally different approach.... A multi-year, multibillion-dollar commitment by Beijing to invest in U.S. infrastructure.”

Mundell continues:

“China has built up an astonishing mountain of monetary reserves, some part of which is earmarked for its Belt and Road Initiative. That program, which is currently slated to deploy some $1 trillion into infrastructure development across 60 countries, could provide a healthy down payment on the crucial long-term capital needed for President Donald Trump’s No. 1 domestic policy initiative for 2018. A multi-year, multibillion-dollar commitment by Beijing to invest in U.S. infrastructure ... could provide the catalyst for a building boom in the U.S. and serve as a bridge for additional middle-class jobs in the U.S.”