- David Gow - guardian.co.uk,
- Thursday October 02 2008
That, in a nutshell, was the collective cry of a swarm of American (and European) bankers, auditors, consultants and industrialists that thronged the cavernous halls of the colossal convention centre in Tianjin at the weekend.
While the western delegates at the World Economic Forum's summer conference in the coastal port city that serves as the maritime entry to Beijing were confused, bemused and hyperanxious about the financial crisis and its impact on the global economy, the Chinese were magisterially assured. Certain that they are the new masters of the universe – now or very soon.
Wen Jiabao, the Chinese premier, made plain that his country's economy is not immune from the crisis. But, unlike the US and Europe, which are heading for recession or in it, China had put in place the monetary and regulatory measures to ensure continued growth.
It won't be the 11.9% of last year but still, at 8 or 9% in 2008 and the same in 2009, a boost to global trade. Inflation, which peaked at more than 8% in February, has been brought down to 4.9%. And, if Chinese exports – enjoying a €170bn (£130bn) surplus with the EU alone last year – are already experiencing slower growth and even heading for a decline, Wen promised to continue the shift towards domestic consumption and to open up the economy further.
But will this happen? Will Wen deliver on his oft-repeated promise to reform China's capital markets? As Stephen Roach, Asia chairman of Morgan Stanley, told delegates, Chinese consumer spending is, at around 35% of GDP, less than half that of the US where the "binge" of the last 14 years has come to an end, leaving the US consumer "toast, done, finished". The US, he added gloomily, "will have its version of Japan's lost decade".
There were two striking aspects to the Tianjin discussions among policymakers. First, the Chinese authorities were blunt that it was up to the US to sort out the mess it had created, putting at risk, as Wen told CNN, "the safety and security of Chinese capital". Chinese investments in US and European financial assets have gone sour in the toxic meltdown. So the country's leaders are demanding global co-operation to fix the regulatory framework, with Liu Mingkang, the top banking supervisor, exclaiming with unusual ferocity that American lending practices had been "ridiculous" and demanding a large say in any reforms.
Second, the Europeans figured as virtual bit-part players, vastly outnumbered by the Americans. David Hale, a Chicago-based consultant and economist, told a group of us over drinks: "The Chinese and Americans are drawn to each other; they have a lot in common – entrepreneurial, can-do."
Apart from the serial China-visitor, EU trade commissioner Peter Mandelson, the most prominent European delegate was Tom Enders, chief executive of Airbus. Over the weekend he and Wen formally opened the plane-maker's first non-European final assembly line – in a $600m (£340m) plant on a remote former cabbage field that took less than 15 months to build and is now the most modern in the world.
Enders denies that Airbus is putting all its eggs in the Chinese basket but he and his executive team are investing heavily in the prospect of sustained growth – not just in the economy but in air traffic as consumers grow richer. They expect Chinese airlines to order more than 3,000 new planes in the next 20 years and Airbus to capture more than half of those.
While the new plant involves little technology transfer, Airbus executives don't rule out co-operating more fully with the Chinese in years to come. The authorities are forcing a merger of the country's two main aerospace groups, AVIC I and AVIC II, into a single company and it is already planning a new large jet to compete with its western rivals/allies.
As the country celebrated its 59th communist national day and the first space-walk by its astronauts, one senior Airbus manager told us: "It'll be extremely tough for them to be really competitive with this aircraft but it's the one after that we should be worried about – even if they have so many mountains to climb over the next 30 years."
A senior European diplomat at the opening ceremony ridiculed that timescale. "The Chinese are investing heavily in R&D and moving rapidly up the technological value-chain but we Europeans are in danger of falling behind and failing to invest in research. We could swiftly drop out of the premier league as far as they are concerned."
It was a shuddering thought at the start of a week that saw the toxic contagion of the US financial crisis sweep across the Atlantic like a tsunami to engulf several European banks and force governments to intervene. The same governments that, as I reported last week, thought their financial institutions would remain on the sidelines and their economic model more robust.
How wrong they – and I – were. And, if my diplomat friend's fears are proven right, there could be worse to come in other sectors too.