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China’s Yawning Gap — And More

March 6th, 2010

Weeks before China’s annual People’s Congress, I suggested that China would not announce a currency revaluation, despite predictions made by some. I gave partial reasoning, here:

Many in the U.S. believe “China is in a bubble.” This may be the case, but it is not a sentiment shared by average Chinese. In South China, compared with a couple of years ago, the buzz has gone, and people are no longer as optimistic as they once were. There’s more grumbling about corruption. Macroeconomic numbers suggest rocketing growth, but on the ground there’s this odd feeling that the air has been let out of the tire.

Looking into my crystal ball, I suggested that Premier Wen Jiabao would instead focus his address on the yawning gap between rich and poor in China. I had to do some looking around online, but here’s something that I picked up today from a news agency out of Latin America:

The speech touched on many issues, but on a number of occasions the premier spoke about the need to make China a fairer society. “We will not only make the ‘pie’ of social wealth bigger by developing the economy, but also distribute it well,” Mr Wen told about 3,000 delegates, returning to a theme that he has often spoken about during his premiership. “[We will] resolutely reverse the widening income gap,” he added later, in a speech that lasted more than two hours.

I would have preferred a quote, but there was no explicit mention of this aspect in their article, “China Premier Details Economic Plan. Now, what do we make of all that earlier commentary coming from the U.S. on a possible currency revaluation out of China? These weren’t predictions at all, it turns out, but are signs of desperation from an American economy that is in much worse shape than many of its leaders are willing to admit. Beijing knows this, by the way.

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