How should the west deal with China? A question that lasted, ever changing, for many centuries is being posed anew. The US, under President Donald Trump, seems determined to change its terms of trade with the country, while China itself, now by some measures the world’s largest economy, is working out what to do with its new status.
The dilemma for politicians also affects investors. It was laid out this week at a conference where I was lucky enough to be in attendance in Hong Kong. Run by CLSA, a powerful Hong Kong broker that is these days owned by Citic Securities, which is majority-controlled by the Chinese government.
On successive days, we heard from Yanis Varoufakis, former leftwing firebrand finance minister of Greece; and Steve Bannon, former rightwing firebrand svengali figure of President Trump. For Mr Varoufakis, China has been an exemplary world citizen. Twice in the past decade — at the end of the 2008 crisis year, and again in late 2015, when alarm was widespread after China’s sudden devaluation — it has done its duty and administered a big fiscal stimulus, lifting the rest of the world economy. Western countries have flooded the world with liquidity during that period, but done much less to create jobs and growth.