Wrapping up the 2010 World Economic Forum in Davos, Switzerland, there was an interesting exchange between Larry Summers, Director and chief economic adviser of President Obama’s National Economic Council, and Zhu Min, Deputy Minister of China’s central bank. Summers, on the authority of the White House, took China’s trade policy to task by subtely reminding Mr. Zhu that there are times when some justification for protectionist measures exists — especially when there’s lots of excess capacity in inventory which induces countries (China) to engage in dumping and when some countries (China) were pursuing mercantilist policies. It was a potent shot across the bow to China. You can read more from the Financial Times’ Chris Giles below.
January 30, 2010 by Chris Giles
Davos – No one has perfected the veiled threat as well as Larry Summers, president Obama’s chief economic adviser. It was on fine display at the World Economic Forum on Saturday.
He was speaking on the main economy panel with Zhu Min, deputy governor of the People’s Bank of China, so it was a great cast list. Mr Zhu’s contribution was to say how he recognised China couldn’t rely on the US consumer for growth in the future, understood there was excess capacity in certain Chinese heavy industries and vowed policy was to make structural changes so that demand would re-balance away from exports and towards consumption.
That is all very well and such cooperative noised certainly please the Davos crowd, but four years ago, his boss made almost the identical contribution to the same panel debate, pledging to slow China’s reserve accumulation and shift demand towards domestic consumption. When asked why anyone should trust Mr Zhu’s words today when …
Being on the receiving end of these veiled threats must infuriate the Chinese, but Mr Summers delivers them with huge aplomb.
I am now leaving Davos. It was quite a news-rich World Economic Forum – Greece, spats over finanical regulation, the latest micro-moves on global imbalances for economics watchers – even though many people seemed to be moaning that the Forum wasn’t what it used to be. That might be true, but they’ll be back.
Read more here.
Photo: www.flickr.com
