Life of the Party: The Bright Side of Financial Turmoil

Like everyone else, I am trying to figure out what the financial turmoil currently gripping the U.S. means, particularly for China. In speaking with economists there’s an underlying but consistent theme that seemed a tad counter-intuitive: this could be a good thing for China and also for the Communist Party. First off, the inevitable economic “adjustment” will take some points off growth in China. That will lessen the pressure on inflation, for a start, something that Beijing has been deeply concerned about. It will also presumably help to cool the property market, which was already softening and possibly even relieve some of the pressure on the environment, if that isn’t being overly Pollyana-ish. Of course, this all has to be done in moderation; too much cooling could have serious social and by extension political consequences. But that’s the good part for the Party: if the economy had begun to decline because of a collapsing environment or mismanagement of the markets/interests rates etc by the authorities people would have been angry with the Party. This way, even if things get nasty, as they may well do, it’s all the fault of those idiotic foreigners and in particular the American greed machine of Wall Street that has brought the world to the brink etc etc. The Party (or at least the Hu Jintao/Wen Jiaobao part of it pushing these policies) gets to achieve its aims of slowing growth and if anything goes wrong they can blame it on the U.S. and appeal for patriotic support of the government’s attempts to minimize the pain for the masses. Sweet! As my colleague Austin would say.