China, China, China… Donald Trump is not the only one obsessed with the Middle Kingdom these days. For the past year or more, countries have been warning each other about their economic dependence on China and New Zealand is no exception. China is now the main destination for our biggest export commodity (dairy) and is the fastest growing source of visitors in tourism, our second biggest foreign exchange earner. Like it or not, we’ve become hooked on the opiate of demand from China.
So, should be worried that the Chinese economy is now recording its slowest annual GDP growth figures in the last 25 years? For now, there are many reasons to treat the glass as still being half full. The extent of China’s slowdown is within what everyone had been expecting. If one can believe the official figures, the current 6.9 percent growth rate is not catastrophically below the 7.3% growth registered the year before, and the economy is still being predicted to record circa 6..5 percent growth every year until 2020. In like vein, the International Monetary Fund is still predicting 6.3% growth in China in the coming year, even though it has downgraded growth in the global economy to only 3.4%. Meaning : China will continue to be a significant driver of the world economy for the foreseeable.
The causes of the slowdown are well known. China is trying to free itself from its old reliance on manufacturing and exports, into a new, sustainable economy based on services and consumer –led expansion. Top use the cliché, it is now a two speed economy – and New Zealand dairy and tourism exports happen to be plugged into the healthier, faster growing part. China’s retail figures for instance, grew by 11.3% last year and services now comprise (for the first time) more than half of the Chinese economy. Hopefully, this relatively robust part of the economy will ease the pain of the slowdown and the jobs that are being lost elsewhere – if social turmoil doesn’t result.
That’s where the crunch will come. Unlike New Zealand in the 1980s, China is doing its best to manage the social costs of its transition. To plump up the economy, it has engaged in a rolling series of interest rate cuts and quantitative easing over the past 18 months – albeit to little observable effect – as it tries to cushion the social impact being felt in the communities that are still reliant on the old steel and coal industries.
In 2016, it will get harder – and costlier – to buy off this potential for serious social unrest. The state of the current five year plan was discussed by Communist Party leadership in October, and the debate reportedly focused on supply side reforms :
During the meeting, the discussion explored stepping up supply-side reforms such as dealing with overcapacity and excess labor in state-owned industries and tax cuts, according to a party official familiar with the discussions. Applying the supply-side theory that embraces productivity gains and reduced tax barriers could reinvigorate the public sector while potentially free up room for private enterprise, according to proponents……
Official media have chimed in, with now frequent references to the supply side. The Xinhua News Agency ran a commentary this month stating that “industry remains the backbone of the economy,” including a pointed statement that services and consumers alone won’t be enough to drive growth. The aim of the economy’s transition “is to make the traditional industrial sector more competitive, rather than less significant,” it said.
The massive job losses of economic changes on the scale envisaged will inevitably test the country’s social and political stability, quite apart from any strictly economic issues to do with China’s looming debt mountain and the rising costs of debt servicing that it faces in 2016. In the coming years , it seems naïve to think that consumer demand can be entirely insulated from these socio-economic upheavals.
Like Europe, Australia, much of Africa and Brazil, New Zealand has allowed its export drive to become addicted to demand from China. We have had ample warning that this reliance is risky but for now – while the good times roll – no one is thinking about diversification. And if that sounds a bit like the prelude to the crash of 2008, that may be because the highly leveraged Chinese economy resembles the pre-conditions for the GFC, and carries similar risks. Lets all hope China is deemed too big to fail.
Oscars and race.
Music awards are dominated by black entertainers. The film industry is quite different. On the upside, the current furore over the exclusion of non-white actors and creative from the main Oscar acting categories may finally throw some welcome daylight onto the hidden, Kremlin-like way in which the Oscar nomination lists are currently concocted.
This year the fact that an A-list black actor has been excluded – Will Smith, for his part in Concussion – has amped up the volume of protest. Yet the more egregious snubs this year have been to Benicio del Toro for his supporting role in Sicario, and the near total dismissal of Straight Outa Compton, hot on the heels of the film – which has been a critical and box office success – being ignored by the Golden Globes. Surprise, surprise. The hip hop that sweeps America’s music awards seems to have functioned as a disqualifier among the old white guys who run the Oscars.
Yet still… the protest seems oddly conceived. If the problem is endemic racism, it is hard to see how a token black face or two amid the 20 top Oscar acting categories – is going to change things very much. In 2004, Jamie Foxx won best actor and Morgan Freeman won best supporting actor. Did that mean Hollywood had suddenly become progressive that year, or during the years when Denzel Washington (or Sidney Poitier before him) won Oscars? Hardly. No more than gender stereotyping and – gender pay gaps – disappeared when Kathryn Bigelow won the best director award for The Hurt Locker.
Hollywood’s racism and gender stereotyping – and even the socio-economic stereotypes about the South that have dogged the careers of talented white actors like Walton Goggins – will not go away when a few token awards are handed out to non-whites on any given Oscar night.
Anyone who saw Kate Tempest’s stunning, powerhouse shows last week will have headed back to her album Everybody Down for traces of what hit them. In April, her debut novel The Bricks That Built The Houses will hit the shops, adding to her multi-threat roles as poet, playwright and rapper.
Online there are few entire concerts (the German show is the best) that convey something of her confrontational power on stage. The early 2010 clip of her reciting her poem “Icarus” is great, as is the celebratory flow she directs at Chuck D at his press conference. But here’s Tempest (a) in slightly more laidback mode doing “The 13 Commandments” and (b) performing from her Brand New Ancients show on the Charlie Rose TV show.
We can’t embed the video so here’s the link to the 13 Commandments video.