This is from an FT email this morning:
The government is rolling out a carpet of deepest red this week for the five-day state visit of Chinese president Xi Jinping, in the hope that he in turn will help roll out a passel of infrastructure projects.
Chinese investment is being counted on for everything from the Hinkley Point nuclear reactor to the HS2 high-speed rail link and the "Northern Powerhouse" project, as Mr Xi heads for Manchester on Friday.
And this is from another:
The Chinese economy grew faster than expected in the third quarter, as resilient growth in the emerging services sector helped compensate for weakness in manufacturing and property.
China's statistics bureau said on Monday that gross domestic product rose 6.9 per cent in the third quarter in inflation-adjusted terms, down from 7 per cent in the first two quarters and 7.3 per cent for full-year 2014. It was the slowest quarterly growth rate since the first quarter of 2009 but higher than expectations.
So just as Chinese growth is declining, its internal problems are becoming apparent, its financial markets' weaknesses are news and its decline in reserves is being noted the UK becomes its best friend.
Was there ever a more obvious case of backing the wrong horse?
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Putting to one side the need for the projects, the puzzle is: why go after Chinese money & Chinese tech (either for nuclear or trains). UK could raise the money itself & in the case of the trains: perhaps rebuilding the UK’s ability to errr – design & make trains would not be a bad thing. Apologies if these are simplistic, patriotic real-world ideas – as opposed to the La La Land stuff that Osborne come up with.
You are spot on
We could raise all the money needed without any problem at all
But Osborne prefers Chinese money to creating a National Investment Bank
Are we on the road to paying rents, dividends and interest to absentee asset owners?
Are they followers of Hayak leading us into the kingdom of debt serfdom?
Yes, in a word
Osborne prefers to direct the surpluses from productive investment in China into the purchase of rents on British subjects.
It makes sense, from a particular viewpoint: having overseen the complete and total dusplacement of productive investment of British wealth by rent-seeking, Osborne’s obvious next step is to extend his successes to China, where they still invest in industry.
This is the Establishment’s little kingdom, the more so they impoverish the rest of us. So, where work’s needed and must be paid for, Osborne likes to tax us to pay for it, taking money out of the economy and making us poorer, and instead of distributing that money back among us where it would serve to make society less unequal, he prefers to send it to the other side of the world so it won’t have that happy effect. It ain’t rocket science, folks 🙂
As well as these valid economic reasons for thinking twice about relying on Chinese finance, there are the two not insubstantial issues of their poor human rights record and their on line hostility to the UK. MI5’s website says under its Threats to National Security summary, “the intelligence services of Russia, China and other countries continue to work against UK interests at home and abroad”.
Here’s a silly idea. As someone has already said, why don’t we create the money via PQE and build our own infrastructure, employ our own people to whom wages will be distributed and those same people will get the economy moving by spending those wages on goods and services?
A silly, quaint idea these days I know. It seems much more appropriate today to go into debt to a foreign power to do work that we are perfectly capable of doing for ourselves.
Another comment I had not read before writing the near same idea half an hour ago
Sorry Stevo
We’re on a wavelength
Here we are, the UK having a GDP per person which is 5 times bigger than China, but we cannot build our own high speed railway line or nuclear power station without going to the Chinese cap in hand? Is that some kind of post-modernist joke?
We cannot even finance it as a country. We are asking the Chinese to finance their own building of infrastructure in the UK for us (the UK government will provide indemnities to the finance providers).
This is already bizarre enough, but it gets worse:
In return for the “Osborne doctrine” of the Chinese providing our infrastructure, we are offering co-operation with the Shanghai Stock Exchange, increased renminbi trading in the UK, legal and educational services for the Chinese. What?
So we have the finance sector profiting from the gov. indemnities, their extortionate interest income for Chinese construction companies, obscure PFI contracts which will be confidential to public scrutiny and the financial service they provide to the Chinese (stock exchange/legal)!
And the UK taxpayer can pay for all this. This is rip-off of the UK taxpayer, as government direct financing would make this a lot cheaper, as the gov. indemnities would fall by the wayside, and better interest rates could be secured, as the UK is a better creditor. (PQE would of course be a further option)
In other words, the government is ripping us off to help its constituency, the finance sector.
Further reading on this.
https://radicaleconomicthought.wordpress.com/2015/10/19/karl-marx-henry-george-and-china/
I had not read this before blogging on a similar theme half an hour ago
I love your opening para, in particular
It may get blogged….
“No one believes companies locate in Ireland because of great employees, infrastructure etc.”
There’s a report in the Irish press that you said the above. Surely not. It is very insulting to the Irish workforce if you did say that.
I said there are great people and skills in Ireland
But I also said that if Irish politicians thought they were sufficient Ireland would not have played the tax card for so long
It’s not insulting by me : I was suggesting what Irish politicians clearly think
A bit off topic, Richard, but as I see you’ve tweeted Zoe William’s most recent article in The Guardian I though this deserved sharing. It may well be the best paragraph Zoe has written all year, and that’s saying something:
‘Poverty is not a naturally occurring germ or virus; it is anthropogenically created through wealth extraction. Any goal that fails to recognise this is not only unlikely to succeed, but can only be understood as a deliberate act of diversion, drawing attention away from what might work; in its place, the anodyne, fairytale language of hope, in a post-ideological world where all politicians just want what’s best and a billionaire is just a benefactor you haven’t met yet.’
(And yes, I corrected a typo in the original :-))
I couldn’t possibly comment on the best para Zoe has written as she has written about me…
But this one is good, important and getting a bad press so it must be doing all right
I may blog it if I get time
Time is my enemy right now
According to a BBC documentary about British Rail (available on the iPlayer until recently), towards the end of the 1970s the UK had the lowest train fares in Europe and was the second most efficient (Sweden most efficient). During the 1970’s BR engineering (Derby) designed & built the Intercity 125 and the revolutionary Advanced Passenger Train. The Intercity 125 has given excellent service for more than 40 years. Development of the APT was abandoned in the early 1980’s.
We now buy trains from Germany, Italy etc etc. I understand that Virgin now buy APT trains from Italy.
What happened to all those skills & knowledge? No wonder the steel mills are closing.
So EDF and China with their massive stake in Hinckley makes long term economic sense does it. Yes it will employ people, I understand that, but do the sums add up, am I missing something.
The sums don’t add up
Nor do the risks
But it makes good money for the City