"and there's nothing remotely grinworthy in the issues he reports. Mainly that, he's prone to absolutes 'the last whatever of hope',and various mistranslations; for example earlier in the article a man saying 'we old beijingers', mistranslated as 'the common people', paints an emotive picture."

Dear Mark Taslov,

If you don't know the difference between 老百姓 (laobaixing - literally "old hundred names" but most commonly translated as "the common people", "common folk") and 老北京人(laobeijingren - 'old Beijingers') then probably best you don't comment on translations by professional translators hired by international media organizations.

None of the petitioners in the videos were from Beijing so it would be very unlikely they would call themselves 'we old Beijingers'. They are petitioning precisely because they have no guanxi.

Apart from that, I'm glad my piece provoked such a strong reaction from you. I actually spend 95 per cent of my time writing about interest rates, the stock market and Chinese banks and insurance companies rather than social unrest.

And I'm sorry my grin offended you.

Hi David,
Sorry for the delay in replying, I've been busy with the global financial meltdown.

Here are some answers to your questions:

Can I ask a few questions?

given the damage that has been done to brand NZ by Fonterra's ill-advised involvement in the poisonous Chinese dairy industry.

How substantial do you gauge the damage to be?

I think the damage is significant. The Communist Party built up an enormous amount of goodwill among its citizens in the aftermath of the earthquake and with its largely successful staging of the Olympics but most people I talk to here say that has all been wiped out by the poisoned milk scandal. Fonterra and New Zealand have been tied to the scandal from the beginning by state media and did not have such a large reserve of goodwill to fall back on.

The financial regulators here have been very conservative about allowing Chinese institutions to invest abroad

Are they in a position to do so now? Could they become significant firesale investors if the world economy really tanks?

Chinese institutions are cash-rich and eager to expand abroad but, following a series of disastrous offshore investments by China’s sovereign wealth fund, banks and an insurer last year (in Blackstone, Morgan Stanley, Fortis, Barclays etc), the government has basically stopped all offshore financial investments this year. The fear of being the “dumb money” that bails out Wall Street banks has stopped China taking advantage of firesale prices but they would have faced political resistance in the US and Europe anyway. Governments in those places would much rather nationalize large swathes of their financial systems (as they’re doing now) than let them fall into the hands of the Chinese Communist Party, which still owns the vast majority of the Chinese financial system. That said, China has over US$2trillion in foreign exchange reserves and the secretive entity that manages those reserves has been quietly taking small equity stakes in public markets all over the world, as well as making investments for purely political reasons – see this story for details: http://www.ft.com/cms/s/0/beaf16ae-8063-11dd-99a9-000077b07658.html

I do agree that NZ should be looking more to this part of the world in all sorts of fields.

Taking the view that China is not immune or decoupled, what export growth possibilities for NZ might we nevertheless contemplate in the next few years?

The people who should be looking to China are those working in the creative and innovative industries, where China is weakest. Architects, designers, artists, inventors etc, environmental innovators.
As far as physical exports are concerned, New Zealand should be leveraging its clean, green image. As China becomes even more polluted and food scares continue to occur, NZ should be promoting clean, organic produce and high quality products made from natural ingredients. I know there is nothing new in this but it is important not to forget your strengths and I think NZ has missed huge opportunities by not becoming much more of a leader on environmental issues at a much earlier stage.
China is the most polluted place on the planet and will undoubtedly be the biggest market for clean energy and environmental cleanup technology for the foreseeable future.

I strongly advise against putting your faith in China to help us through the current crisis.

As Stephen points out, stock markets in the region have been hammered, led by the decline in the Shanghai market which began before anywhere else.

It's true the Chinese stock market had increased six-fold over a two-year period so the losses we've seen are not as damaging for the overall economy as they otherwise would have been.

Although this is a country of 1.3bn people, 730m of them are peasant farmers with an average income of NZ$800 per year. Their urban cousins, who are in a much better position, have an average annual income of NZ$2,800.

Chinese financial institutions are mostly insulated from the credit crisis because China has a closed capital account, which means the currency is managed in a sliding peg against the US dollar and is not freely convertible and all cross-border investments are monitored and controlled by the government. The financial regulators here have been very conservative about allowing Chinese institutions to invest abroad, in part because China bailed out all of its own banks less than a decade ago and kept bailing them out until just three years ago.

But as others have pointed out, China is absolutely not immune from the global crisis - not only because exports are so important but also because the domestic property market appears to have stalled and could be about to go off a cliff.

Only the most optimistic predictions are saying China will grow 9 per cent next year - down from 12 per cent last year.

This is because China's economy is largely driven by investment - new property developments and new factories to make all those exports.

If the export and property sectors are no longer growing at warp speed then people will stop investing and the Chinese economy will slow dramatically. That will cause a huge jump in bad loans and possibly another financial crisis in China.

That is why Beijing is considering a massive fiscal stimulus package and government-led investment to pump-prime the economy. There is only so much they can do but this is a question of survival for the Communist Party.

In China it is not just unemployment you have to worry about it is social instability (the government's euphemism for riots, protests, revolution) that results from unemployment. According to internal government estimates from earlier this decade, the Communist Party needed to keep the economy growing at 7% a year to ensure its own survival because if growth dropped below that level then it would not be able to manage (read - suppress by any means necessary) the resulting "social instability". I think the red line is now lower - I'm hearing more like 4 or 5% - but it still exists.

When the economy collapses in democracies you vote in a new government. If the economy collapses here there is no pressure-release valve so when things get really bad your only recourse is "social instability" of the sort we saw centred on Tiananmen Square in 1989, when China was struggling with 24% inflation, rampant corruption (at levels we see again today) and a collapsing economy.

And I'm afraid even if China had really "de-coupled" and was about to become the global engine of economic growth, New Zealand would be in a very poor position to capitalize given the damage that has been done to brand NZ by Fonterra's ill-advised involvement in the poisonous Chinese dairy industry.

I do agree that NZ should be looking more to this part of the world in all sorts of fields and should be educating its populace about the growing importance of China.

I just don't think China's going to help the world out of the hole this time around.

Best Regards,

Jamil Anderlini
Deputy Beijing Bureau Chief
Financial Times
www.ft.com

One other point I'd like to make. As quoted by state media (in Chinese and in English) Wen Jiabao specifically mentioned the Tangshan earthquake when he said last week's tremor was the "most widely-felt" (in the Chinese version) and "most destructive" (in the English translation) since the founding of the People's Republic in 1949.

Far from ignoring or denying the Tangshan quake, Premier Wen appeared to be comparing the current efforts with the shameful response in '76 and making the valid point that today's Party is a very different one from what it was then.

Here are the first few lines of the English report from Xinhua from last week:

CHENGDU, May 16 (Xinhua) -- Rescue operation and disaster relief for victims in the worst earthquake over decades are of top priority of the nation, and thus require concerted efforts from the whole country, Chinese Premier Wen Jiabao said Thursday night.

Monday's 7.8-magnitude earthquake that ravaged southwestern Sichuan Province and was felt in most parts of the country was the "most destructive" tremor and had the "most wide-spreading impact" since New China was founded in 1949, Wen said on a meeting of the rescue headquarters under the State Council headed by himself.

It was even more powerful than the Tangshan earthquake in 1976, Wen said. The catastrophe in northern Hebei Province claimed about 240,000 lives three decades ago.

I have just returned from the Sichuan earthquake zone and I’d like to make a couple of points.

I arrived in Dujiangyan near the epicenter at 5am on Tuesday morning, less than 15 hours after the initial quake, and was impressed by the sheer number of rescue teams from the military, Ministry of Civil Affairs (they're the “non-existent” emergency response teams in orange jumpsuits with all the specialist rescue equipment if you're watching television here in China) and from state-owned enterprises who had mobilized immediately and arrived in the areas accessible by road within a couple of hours, along with numerous cranes and other heavy machinery.

I travelled extensively throughout the region over the past week and everywhere I went the government, military, individual citizens, state-owned and private companies were working to rescue people and get food, water and shelter to the worst-hit areas. Probably many more people could have been saved if the earthquake had not happened in a mountainous region but rescue teams and the army still did an incredible job clearing landslides and building temporary roads so quickly.

It is easy to be cynical about the clumsy propaganda methods employed by the totalitarian Chinese system and domestic coverage of this disaster has been carefully packaged by the propaganda mandarins in Beijing.

But it is true that the current generation of leaders, particularly Premier Wen, have been characterized by a marked and authentic concern for the plight of the common people since they came into power just over five years ago and their response to natural disasters this year can only be compared favourably, not only to the junta in Burma but to the Bush Administration after Hurricane Katrina.

The official death toll from the Sichuan quake is preliminary at best as rescuers have not even reached some of the more remote mountain towns and villages and registration of survivors had hardly started when I left the area. We can expect the final toll to be a lot higher although the official figure is still likely to be manipulated and understated for political purposes.

One last thing. Unless they are a diplomat, I am unclear why the person who posted this blog chose to remain anonymous. If they work for a state media organization as an English polisher (as I suspect they do) then their criticism of the Chinese propaganda machine would seem a little hypocritical.

Most other people do not need to fear retribution from the authorities for posting their opinions in English on overseas websites and as long as they write in a personal capacity it is hard to see how their employer could object to this blog.

Jamil Anderlini
Beijing Correspondent
Financial Times
Jamil.anderlini@ft.com