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Trading Places - China and U.S. in the Economic Crisis

New America Media, News Analysis, Jun Wang Posted: Sep 25, 2008

Editor's Note: As Chinese media view the American government's attempts to halt the meltdown on Wall Street they are experiencing a sense of dj vu. It feels like China from 30 years ago before there was economic reform. Jun Wang monitors Chinese media for New America Media.

In times of hardship, China and the United States seem to have traded places. The United States seems to be moving closer to a Communist economy in the wake of the financial implosion, while officially Communist China is hurtling towards capitalism.

The U.S. government is bailing out troubled big players like mortgage giants Fannie Mae and Freddie Mac, as well as AIG Inc. in effect, putting the companies under federal control. For Chinese living in the United States this sounds very familiar. It's like China before the economic reforms started 30 years ago. "Welcome (America) to communism!" crow banners on Chinese online forums like Wenxuecity.com.

Meanwhile, over in China they are dumping tons of milk instead of letting people drink it. That sounds like some of the worst insanities of capitalism.

But milk suppliers, most of whom are farmers, have no way to sell after the recent tainted milk scandal.

Luckily for China, though, scandals like these push forward political reform. Officials have been educated to take some responsibility.

Changjiang Li, Minister of China's General Administration of Quality Supervision, Inspection and Quarantine stepped down Monday reports the World Journal. Li became the second minister-level official to resign this month after Shanxi Province governor Xuenong Meng stepped down. Meng had to give up his seat because of a reservoir collapse that killed more than 200 people in his region.

As far as the Wall Street meltdown is concerned, Chinese bloggers are shaking their heads. On MITBBS.com, the top Chinese forum in the United States, a blogger by the name of "Gitler" pointed out it's unbelievable that John Thain who has been CEO of Merrill Lynch for less than a year could collect $ 9.7 million in a payout as a result of the deal with Bank of America, while about 40,000 employees lost their jobs on Wall Street.

"If the economic disaster happened in Japan, there would have already been many CEOs cutting themselves in half," said "California 12" on MITBBS.com. Bu-shi-do the "Way of the Warrior" is the traditional Japanese code of conduct where leaders simply thrust a knife into their stomachs after losing.

Chinese language media in the United States also focused on how people from the Chinese community are affected by the economic downturn. The Ming Pao Daily reported that many Chinese employees of companies like Lehman Brothers and Merrill Lynch are in danger of losing their legal status after the bankruptcies.

Immigration attorney Yiyu Fan told the Ming Pao Daily that dozens of Chinese employees from the two companies have called or emailed him about issues related to their immigration status. According to Fan, company bankruptcy doesn't void employees' H1-B work visas. But if H1-B holders are laid off as a result, they have to immediately get rehired by some other company. Otherwise, their legal status in the United States expires.

"Don't be too serious" on Wenxuecity.com also said that the sub-prime crisis was hurting the Chinese in unprecedented ways. The post said that Chinese people prefer buying their own homes to renting. They try their best to hold on to the property until the last minute. When they have to give it up in a weak market, they end up losing money.

But with China owning so much of American debt, some Chinese media are worrying about the U.S. meltdown bringing China down as well. A survey on China Central Television asked whether the US economic crisis will be the last straw. About 30 percent of the respondents feared that the tainted milk and the US economic crisis will plunge China into crisis as well.

The Chinese government currently has more faith in the U.S. economy than Chinese people living inside of the United States, though government mouthpiece People's Daily has again called (just as it has done for the last decade) for a new global economy system without America being the center. Will the Wall Street Crisis End the U.S. Era? Asked an editorial in The International Herald Leader published by Xinhua News Agency in Beijing. But the editorial said that America is still the top, incomparable economic power and would stay that way for awhile.

China and the United States are coming together to try and resolve the problem reported The Financial News published in Beijing. According to the newspaper, Morgan Stanley is in touch with China Investment Corp. The latter may end up buying 49 percent stock share of the American company.

And if all else fails, there is one other way out. The World Journal quoted an unnamed senior U.S. official saying that the Pentagon has decided to sell Taiwan weapons valuing $11 billion before the end of Bush's administration.

"War is always the best stimulant for [economic] growth. All people, even Bush who doesn't know about economy, knows this," quipped a blogger on MITBBS.com.

It's Still The Economy, Stupid!

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