First up is news about the revival of Macau as a gambling destination. After overtaking Las Vegas in terms of gaming revenues a few years back, this town fell on hard times as the PRC imposed limits on the number and frequency of mainland visitors coming to Macau. Most prominent among the PRC's stated concerns were local government officials siphoning off the people's money to let the wheels of fortune spin. Now, it appears that the Communist leadership is taking a more relaxed attitude to ensure the continued prosperity of the erstwhile Portugese colony. Via Reuters:
China has quietly eased restrictions on its citizens traveling from Guangdong province to Macau, sending casino stocks soaring on Monday as industry executives bet on record October earnings in the world's hottest gambling market...Alarmed that some Guangdong residents were gambling too much in neighboring Macau, China last year imposed new rules limiting them to two trips a year to the former Portuguese enclave. But the authorities began easing up on the rule as early as two months ago, and noticeably loosened the restriction at the start of this month, said top executives at two of Macau's six casino licensees, speaking on condition of anonymity due to the sensitivity of the situation.Next up is a silly feature, really, that's very much in line with Hugo Chavez scoring propaganda points by offering gas at subsidized rates to poor American communities. The message there was, "Hugo cares more about the welfare of working Americans than Bush does." Similarly, our favorite official publication China Daily is portraying the PRC as a work destination for jobless gweilo--particularly those of the Yanqui variety, hence the made up caption above. The message is clear: "Obama can't find you jobs--but Chairman Hu can." So Hu's your poppa now?
"The latest version is (they can travel to Macau) once a month out of Guangdong," said one of the executives. "Gaming revenues for the first two weeks of the month have been good..."
Macau generated HK$105.6 billion ($13.5 billion) in gross gaming revenues in 2008, more than double the HK$46.7 billion generated by the Las Vegas Strip during the same period, according to a prospectus from Wynn Macau, the Macau assets of Wynn Resorts, which is preparing an IPO in Hong Kong. But Beijing clamped down on mainland visitors to Macau in the middle of last year amid a proliferation of stories of officials illegally gambling away millions of dollars in government funds.
That clampdown, combined with the global financial crisis, sent a chill through Macau, with gaming revenue down 12.5 percent in the first half of the year. The return of Chinese tourists and an improving economy helped Macau post record casino revenue in August.
When the best job Mikala Reasbeck could find after college in Boston was counting pills part-time in a drugstore for $7 an hour, she took the drastic step of jumping on a plane to Beijing in February to look for work. A week after she started looking, the 23-year-old from Wheeling, West Virginia, had a full-time job teaching English. "I applied for jobs all over the US. There just weren't any," said Reasbeck, who speaks no Chinese but volunteered at the 2008 Beijing Olympics. In China, she said: "The jobs are so easy to find. And there are so many."And last but not least is another wacked out story about China wanting to set up a "supra-sovereign" fund that would help LDCs funnel investment which helps their fellow countries' development instead of channeling them into Uncle Sam's wasteful spending or overall US superconsumption. This isn't the first time this idea has been bandied about at the PBoC's deputy guv'nor, Hu Xiaolian, contributed an earlier paper to a G-20 workshop on the causes of crisis. The main point being, of course, that it has little to do with imbalances or currency issues. From Hu's piece on pp. 81-88 (warning: huge 4GB file):
Young foreigners like Reasbeck are coming to China to look for work in its unfamiliar but less bleak economy, driven by the worst job markets in decades in the United States, Europe and some Asian countries. Many do basic work such as teaching English, a service in demand from Chinese businesspeople and students. But a growing number are arriving with skills in computers, finance and other fields.
"China is really the land of opportunity now, compared to their home countries," said Chris Watkins, manager for China and Hong Kong of MRI China Group, a headhunting firm. "This includes college graduates as well as maybe more established businesspeople, entrepreneurs and executives from companies around the world." Watkins said the number of resumes his company receives from abroad has tripled over the past 18 months.
It is noteworthy that, in time horizon the high surplus in southeastern Asia and the low savings rate in the U.S. were not synchronized, and there is no causal relationship between the two. It is illogical to attribute the ongoing financial crisis and the growth model featuring excessive overdraft of some developed countries to exchange rate issues of the developing countries.Yes, yes, whatever that means. Try selling it to Obama's union buddies. Nearer to the conclusion, we get the suggestion of creating a supra-SWF to get around the usual, vague insinuation that China has "no choice" but to pile on more dollar assets given the current system. (Wouldn't this alternative system also mean that other LDCs pile up external deficits instead of the West?)
Secondly, the role of special drawing rights (SDR) should be enhanced. In the long run, efforts are needed to promote diversification of the international monetary system. Moreover, since the developing countries lack the necessary fund to increase investment and consumption, considerations can be to setting up a “supra-sovereign wealth investment fund” to help channel capital inflow into developing world so that these countries can serve as new engines in global recovery and growth.Now, Bloomberg has a write-up citing Hu Xiaolian bandying the ideas expressed above in the run-up to the Pittsburgh G-20:
China’s central bank deputy governor, Hu Xiaolian, proposed setting up a multinational sovereign wealth fund to invest in developing nations and help reduce the danger of another financial crisis. “Considerations can be to setting up a ‘supra-sovereign wealth investment fund’ to help channel capital inflow” into developing nations to help them become engines of global growth, Hu said in a paper posted on a Group of 20 Web site maintained by the U.K. Treasury. Hu reiterated Chinese calls for greater use of special drawing rights, the International Monetary Fund’s unit of account, instead of the dollar.A commentator usefully points out that operationalizing such a system is difficult:
“Operationally, it may not be easy” to set up the fund suggested by Hu, said Ma Jun, chief China economist at Deutsche Bank AG in Hong Kong. “Who is going to run the show? How to control the risks of investing in emerging-market economies?”... Hu’s proposal “will give countries with excess foreign- exchange holdings more options to invest in the emerging world rather than in the U.S.,” Deutsche’s Ma said.For many reasons, the IMF is not usually perceived as an impartial overseer of international financial arrangements. Despite China's obviously self-serving "blame the US, and if not, the US-designed international system" arguments, the supra-SWF idea is certainly not an idea to be dismissed outright. However, there is much work to do to make it a reality, especially China being more proactive in international economic diplomacy. Can the Chinese replace the Americans as the movers and shakers in LDCs? They certainly have the cash; whether they have the will is another matter entirely.