Archive for June 22nd, 2011

Wednesday, June 22, 2011

Fresh Ideas: Yes you Can (default on your Debts)

On the phone, saving the world

On the phone, saving the world

Two leading German social democrats (SPD) – one long past his career, and one a potential nominee for chancellorship – believe that if Greece defaulted on its debts, it wouldn’t lead to economic disaster. “The psychological effects of a smaller EU member state’s default would be only temporary”, says Helmut Schmidt, chancellor from 1974 to 1982, and co-editor of Germany’s weekly Die Zeit. If the Greek government defaulted, Europe should – more than ever – help to get the Greek economy going again, in terms of employment, productivity, and national income.

Peer Steinbrück, finance minister from 2005 to 2009, who hasn’t ruled out running for chancellorship in 2013, calls for genuine cancellation of Greek debts. A mild conversion of debts would only allow for a short reprieve, said Steinbrück.
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Related
» Euroland, Aching to Grow, June 14, 2011
» How to become Virtuous, M. Pettis, June 14, 2011

Wednesday, June 22, 2011

Ai Weiwei freed on Bail, Hu Jia to be freed on Sunday

Ai Weiwei (艾未未) has been freed on bail, reports Xinhua, quoted by sina.com‘s finance news website (新浪财经). Investigations to date had revealed that Ai Weiwei’s company (北京发课文化发展有限公司) had evaded huge amounts of tax payments and intentionally destroyed vouchers. Ai Weiwei had shown “a good attitude” in that he had pleaded guilty, and given that he was suffering from chronic disease, and demonstrated willingness to actively settle the outstanding tax bills, he had, in accordance with the law, been released on bail.

Taiwan’s newsagency CNA quotes Ai’s older sister Gao Ge (高阁) as saying that Ai had returned to his home in Beijing, and that his health was not too bad, although he had lost some weight. Chinese authorities had hinted that Ai had evaded taxes on a massive scale (中國當局暗示他涉及逃漏鉅額稅款).

Ai said in a telephone converstation with the BBC on Wednesday that he was now at his home in Beijing – “I can’t talk to media but I am well, thanks for all the media attention”.

Amnesty International, also in a statement on Wednesday, said that

Ai Weiwei’s release on bail by the Chinese government must not ease the international outcry about other activists detained during this year’s ‘Jasmine’ crackdown.

Ai’s release is said to be coinciding with visits by China’s chief state councillor Wen Jiabao to Britain and Germany, and Catherine Baber, Amnesty International’s Deputy Director for the Asia Pacific, is quoted by AI’s website as saying that the human rights campaigner’s release could be seen

as a tokenistic move by the government to deflect mounting criticism. […] “It is vital that the international outcry over Ai Weiwei be extended to those activists still languishing in secret detention or charged with inciting subversion.”

Meantime, AIDS campaigner Zeng Jinyan (曾金燕) visited her husband Hu Jia (胡佳) at Beijing Municipal Prison on Monday, she told Associated Press (AP) in an online conversation, as her mobile phone was apparently switched off.

Hu’s three-and-a-half-year jail term is due to end on Sunday, but other dissidents released from jail recently have been kept under house arrest, according to AP, as quoted by the Guardian.

Zeng wasn’t prepared to give interviews, possibly for fear that speaking to the foreign media might jeopardise Hu’s release, writes AP.

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Related
» Comments – Zeng returns to Beijing, June 2011

Updates / Related
» The Crackdown continues (“tax issues”), Nov 16, 2010

Related Tags
» Ai Weiwei
» Hu Jia
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Wednesday, June 22, 2011

Economic Growth: The Sea is for Free

I don’t know the exact numbers right now, but transport is usually several times more costly per mile (truck, train, etc.) than seaborne.

The argument comes to my mind as I’m reading one of  Spiegel Online’s top stories of today: “How China itself puts the brakes on its growth” (Wie China sein Superwachstum selbst ausbremst).

Infrastructure in investment, a main driver for economic growth, can’t last forever, argues the author, Sebastian Dullien, as it won’t continue to make sense forever. Making the RMB convertible would be another tricky task in the near future. Cheap labor was declining, too.

But cheap labor is only referred to as it appears in the coastal provinces – labor migration from the hinterland, that is. But much of China’s hinterland still has a strong potential for growth – for many years to come. Whereever there are navigable rivers, trading manufactured goods from China’s west to its east should be possible.

But here, Beijing needs to make the right decisions, to make the already well-off provinces invest in and buy from hinterland provinces, or to make companies there successful sub-contractors to established companies along the coastline.

Either way, when it comes to our press, the narrative of an ever-growing China seems to abate, and that’s good. The narrative of unstoppable economic growth had become a political argument, and one that frequently bought off political decisions in the West during the past two decades at least.

If decency wasn’t able to stop this kind of corruption within European politics, maybe more sober business assessments still can.

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Related

“A Fly-Head-Sized Benefit”, January 8, 2010

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