The year ahead

By Brad Franklin
0 Comment(s)Print E-mail, January 12, 2013
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Another Christmas and New Year season is over as we launch into a brand new year. Again in 2013 the most visible players on the world stage will be America and China with supporting roles from others, primarily in the Middle East and Europe. I expect that the murderous events in Syria will continue until its leadership changes, which most likely will happen during the coming year. The tensions between the Israelis and the Palestinians will continue to fester without resolution this year. The economies of various countries in Europe will improve but continue to be problematic. My own country, Canada, will play quietly but relatively successfully in a corner. As usual, much of the world's attention will be directed to China's emerging economic power and America's continuing histrionics.

In China, a state think-tank is forecasting GDP of better than 8 percent in 2013. The optimistic outlook comes in spite of the third quarter performance that showed year-on-year GDP growth of 7.4 percent and marked the lowest such growth in more than three years.

Still, Lu Zhongyuan, deputy director of the Development Research Center of the State Council, has no doubt that China's economy will rebound and show strong growth. He believes the government should focus on promoting sustainable development and containing imported inflation. He maintains that China's economy has bottomed out since June of last year. Lu credits the country's economic restructuring, innovation incentives and the market's self-stabilizing forces. He is confident the momentum will continue to drive up growth in the year ahead.

The picture is not all rosy, however. With the increased overall prosperity comes the spectre of rising inflation, some of it the result of events beyond China's borders. Like it or not, the economy of any country is inextricably linked to those of its trading partners and to world conditions beyond its control.

Complicating China's outlook is, as usual, the issue of its immense population, much of it still falling behind. The country's leaders want to alleviate poverty in some of China's poorest areas to achieve more balanced regional development. During a recent visit to Fuping County in Hebei Province, Party chief Xi Jinping called on local authorities to focus their efforts on helping people climb out of poverty by implementing policies designed to support agriculture. Most of the people in Fuping County are farmers and their average annual income is just 2,400 yuan, making them among the most impoverished in China. The overall improvement in the country's financial strength has yet to catch up with people like this -- and the problem is compounded by the embezzlement of some funds earmarked for poverty-elimination programs, something Xi termed an "intolerable crime".

In the United States, meanwhile, the American headline-grabbers continue to do the Texas Two-Step along the edge of the so-called Fiscal Cliff. The problem in the U.S. is entirely different from that of China. There, two political parties, the Democrats and the Republicans, each control one of the houses of Congress and seemingly can't agree on anything. Multi-party government has its advantages as long as either one party has a clear majority or the parties can work together for the good of the country. The Democrats and the Republicans have fundamentally different views of how the United States should be run, and for some reason those positions have hardened in recent years to the point at which cooperation seems virtually impossible. America achieved its meteoric rise to prominence because the two parties worked together even while they competed for the hearts and minds of the people, but that has changed and problem-solving has become almost a lost art. The U.S. is paying a heavy price for this political intransigence.

The Fiscal Cliff is an artificial construct to begin with. It marks the point, at the end of 2012, when certain programs were to expire and, as a result, certain changes would take place. The changes are in two broad categories, affecting both taxation and spending. American politicians put the programs in place to begin with and have known for months, if not years, that the changes were built into their legislation. It is a mark of the dysfunctionality of the government that nothing was achieved to deal with the Cliff until the eleventh hour and even then the fix was only a stop-gap.

In Washington, after all-night sessions, an interrupted Christmas week holiday and endless posturing by politicians on both sides, a deal of sorts was finally hammered out. It dealt primarily with the taxation side of the problem and didn't do much to address government spending in spite of the fact that the U.S. has hit its debt ceiling. The temporary solution was cobbled together in the Senate, and agreed to, eventually, by the House of Representatives, although there is some question about whether that was a product of considerable nose-holding or sheer exhaustion. A section of President Barack Obama's vaunted health care reform died in the process, even though it was a piece that even the Democrats acknowledge was flawed and would have had to be fixed. Overall, the richest Americans will see their taxes go up but the majority of the middle class will not. The catch is that lingering problems with the U.S. economy, including spending and the national debt, were not addressed in the bipartisan deal. The legislation has set a new deadline of two months hence for addressing these concerns. As more than one lawmaker put it, "we just kicked the can down the road." Until then, we'll be treated to more hand-wringing and partisan bickering.

So China has a plan and a prediction of good things to come. We'll get another estimate of how all that is working in about two weeks when the National Bureau of Statistics releases its figures for fourth-quarter GDP growth and the growth for all of 2012. Americans, who would love 8 percent growth, have television news conferences and narrowly-averted disasters of their own making. The bit-players have a variety of their own issues to contend with. For pundits like me the year ahead will certainly be interesting.

Brad Franklin is a former political reporter, newscaster and federal government employee in Canada. He is a regular columnist for China's English Salon magazine and lives on Vancouver Island.

Opinion articles reflect the views of their authors, not necessarily those of


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