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Is China the big crisis winner?

Oddly parallel stories in the New York Times and the Washington Post today say more or less that Chinese firms are snapping up everything in sight now that the financial crisis has given them a competitive edge. "The sheer scope of the agreements," the Post‘s Ariana Eunjung Cha declares, "marks a shift in global finance, ...

Oddly parallel stories in the New York Times and the Washington Post today say more or less that Chinese firms are snapping up everything in sight now that the financial crisis has given them a competitive edge.

"The sheer scope of the agreements," the Post‘s Ariana Eunjung Cha declares, "marks a shift in global finance, roiling energy markets and feeding worries about the future availability and prices of those commodities in other countries that compete for them, including the United States."

And for the Times, Keith Bradsher makes the case that China is using the crisis to retool:

The country is using its nearly $600 billion economic stimulus package to make its companies better able to compete in markets at home and abroad, to retrain migrant workers on an immense scale and to rapidly expand subsidies for research and development.

Construction has already begun on new highways and rail lines that are likely to permanently reduce transportation costs.

And while American leaders struggle to revive lending — in the latest effort with a $15 billion program to help small businesses — Chinese banks lent more in the last three months than in the preceding 12 months.

China is also making it easier for companies to acquire foreign firms:

The [commerce] ministry is now leading its first mergers and acquisitions delegation of corporate executives to Europe; the executives are looking at companies in the automotive, textiles, food, energy, machinery, electronics and environmental protection sectors.

Delve a little deeper into Bradsher’s story, however, and there’s less here than meets the eye. There’s still the fact that some 20 million migrant workers have lost their jobs. "The social safety net of pensions, health care and education barely exists," Bradsher notes. And China is losing some of its low-tech industries to countries with even less weaker labor and environmental laws. Exports fell more than 25 percent in February.

Nor can we assume that China’s economic stewards really have a handle on the economic zeitgeist. The Financial Times reports today that the country "has lost tens of billions of dollars of its foreign exchange reserves through a poorly timed diversification into global equities just before world markets collapsed last year." 

The bottom line: Be skeptical of claims that China is taking over the world right now. If anything, Beijing’s list of domestic problems is getting longer, not shorter.

Oddly parallel stories in the New York Times and the Washington Post today say more or less that Chinese firms are snapping up everything in sight now that the financial crisis has given them a competitive edge.

"The sheer scope of the agreements," the Post‘s Ariana Eunjung Cha declares, "marks a shift in global finance, roiling energy markets and feeding worries about the future availability and prices of those commodities in other countries that compete for them, including the United States."

And for the Times, Keith Bradsher makes the case that China is using the crisis to retool:

The country is using its nearly $600 billion economic stimulus package to make its companies better able to compete in markets at home and abroad, to retrain migrant workers on an immense scale and to rapidly expand subsidies for research and development.

Construction has already begun on new highways and rail lines that are likely to permanently reduce transportation costs.

And while American leaders struggle to revive lending — in the latest effort with a $15 billion program to help small businesses — Chinese banks lent more in the last three months than in the preceding 12 months.

China is also making it easier for companies to acquire foreign firms:

The [commerce] ministry is now leading its first mergers and acquisitions delegation of corporate executives to Europe; the executives are looking at companies in the automotive, textiles, food, energy, machinery, electronics and environmental protection sectors.

Delve a little deeper into Bradsher’s story, however, and there’s less here than meets the eye. There’s still the fact that some 20 million migrant workers have lost their jobs. "The social safety net of pensions, health care and education barely exists," Bradsher notes. And China is losing some of its low-tech industries to countries with even less weaker labor and environmental laws. Exports fell more than 25 percent in February.

Nor can we assume that China’s economic stewards really have a handle on the economic zeitgeist. The Financial Times reports today that the country "has lost tens of billions of dollars of its foreign exchange reserves through a poorly timed diversification into global equities just before world markets collapsed last year." 

The bottom line: Be skeptical of claims that China is taking over the world right now. If anything, Beijing’s list of domestic problems is getting longer, not shorter.

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