Chairman of China's SWF Lectures Europe on the Accumulated Troubles of Worn-Out Welfare State
At about 12:30 in the interview above with Aljazeera (link here), Jin Liqun, the chairman of China's sovereign wealth fund, gets tough with Europe and criticizes its welfare state:
"If you look at the troubles which happened in European countries, this is purely because of the accumulated troubles of the worn out welfare society. I think the labor laws are outdated. The labor laws induce sloth, indolence, rather than hardworking. The incentive system, is totally out of whack.
Why should, for instance, within the Eurozone, some members' people have to work to 65, even longer, whereas in some other countries they are happily retiring at 55, languishing on the beach? This is unfair. The welfare system is good for any society to reduce the gap, to help those who happen to have disadvantages, to enjoy a good life, but a welfare society should not induce people not to work hard."
HT to Morganovich, who comments in an email: "The world sure has changed. If you had told me 10 years ago that China would be preaching the virtues of capitalism and the pitfalls of a welfare state to Europe (and be right), I would have never believed you."
Update: Look for the quote above in tomorrow's WSJ featured as the daily "Notable and Quotable."
Update: Look for the quote above in tomorrow's WSJ featured as the daily "Notable and Quotable."
17 Comments:
Nation-state capitalism?
Yeah, how dare those prisoner-laborers in China slack off. They need incentives.
More pompous pettifogging from some guy who sits behind a desk in a suit. How about some sermonettes on the virtues of thrift also?
Benjie, outside of some 19th-century prose, I don't think I've seen the word "pettifogging" used by anyone other than you. And he did talk about thrift, when he mentioned how much the Chinese save.
The bigger issue here is that the corporation he supervises was funded by a govt bond issue and who knows who bought those bonds or if the ultimate Chinese bond-owners even had a choice. Since his corporation is owned by the state and all profits go back to them, obviously he's no free market guy. The European socialists are obviously hoping that the Chinese "Communists" will bail them out, one govt to another, but it is a giant joke that the largely poor Chinese should be asked to bail out the richer Europeans. Good for him for calling out the ridiculous European welfare state, but this guy wouldn't be in the position of power he's in without the Chinese govt either. So I wouldn't call what he espouses "the virtues of capitalism," as he's far from that too, just perhaps closer to it than the European dimwits who spent too much and want a bailout.
On the other hand, calling your largest customer a nation of lazy, indolent, out of whack, slackers might not be the very best sales pitch, either. :)
I'm sure "someone" in China choked on their Saki on hearing that one.
“Worn out welfare society”
That’s exactly it. At least in France I can tell you that’s the best description of where we stand right now.
"I'm sure "someone" in China choked on their Saki on hearing that one"...
Wow! When did the Chinese take up drinking 'Japanese' rice wine?
this guy is the head of a chinese fund.
he knows a bad investment when he sees one.
that said, not he's not looking at china either. they are much better at talking a big game that really doing it.
they are about to collapse.
property markets are in real trouble and the government is jamming the banks with liquidity.
they have built ridiculous overcapacity and made huge investments to prop up employment and imaginary growth and those loans will never be paid back.
you can count investment in a 10th cement plant when you only have demand for the output of 6 as gdp or the construction of another empty block of offices, but they are not really useful.
they are also debt funded.
china is not a welfare state, true enough, but they are a Potemkin village built around systemic overinvestment driven by lax lending by the state.
their collapse is going to make the US subprime issue look like a walk in the park.
of course, unlike the US, china is a big net creditor, so they at least have the money to take some of this hit, but it's going to do massive damage to the debt markets of the rest of the world.
While I agree with some of the sentiments put forth, these statements are made by someone living in a society where 40 million people still live in caves.
Grain of salt.
james-
your is a totally orthogonal argument.
he is the head of s sovereign wealth fund making investment decisions.
he looks at europe and sees an unsustainable system unable to meet its debts and therefore a bad credit risk for investment.
what's more, he correctly identifies why.
his own nation's wealth has nothing to do with it.
there is no "grain of salt".
the two issues have little to do with one another.
What will China's Soverign Wealth Fund be used for?
From the KPMG China analysis of the twelfth Five Year Plan (2011->2015):
"A pension scheme under 5YP will enable more comfortable retirement for Chinese citizens.
- Urban Pension; China aims to have 357 million people covered by urban pensions; up from 257 million in 2010.
-Rural Pension; all rural residents will be covered."
Also China's high personal saving rate (31%) is being taken aim at:
"In the 12th 5YP, the government intends to boost social welfare spending and thereby reduce Chinese citizens' need to save; this freed up money would presumably be injected into the economy as consumer spending."
morganovich comments that "china is not a welfare state, true enough...". This may no longer be true by 2016.
China's Premier, Wen Jiabo, comment on the eve of the unveiling of the newest Five Year Plan for China:
"We should not only make the cake as big as possible, but also distribute the cake in a fair way and let everyone enjoy the fruits of reform and opening up"
Much of the latest 5YP has to do with greatly expanding social welfare for the populace.
buddy-
that's an interesting point.
it's always easier to see flaws in others rather than yourself, huh?
looks like china is moving toward the europe they decry.
of course, that assumes a monolithic china.
the views of the head of the sov wealth fund are not necessarily the views of the political leadership and more than the views of the head of calpers are those of the california state assembly.
the two are faced with different pressures.
the fund managers need to generate return. the politicos need to appease a populace, often by doing exactly the things that makes the job of a fund manager hard.
Sprewell-
I enjoy your commentary, even when I disagree with it.
I like "pettifogging," "jackanapes," and even "vile excretum."
Comes from being a history buff.
There was some incredibly hypocritical about a Chines Communist Party front man, besuited and bedesked, serving up capitalist homilies to an eager Western audience.
bunny-
if you are going to repeatedly use such silly verbiage as "pettifogging" you should at least learn to use it properly.
it means mired in and overemphasizing small details.
how was anything he said overly focused on small details?
that was a simple, big picture statement: "you have a social welfare system you cannot pay for and that encourages your citizens not to work and create the growth you need, therefore your debt is a bad risk".
that's nothing like pettifogging.
The truth of the statement is not dependent on the person who makes the statement.
Buddy: "Much of the latest 5YP has to do with greatly expanding social welfare for the populace."
Those Chinese are no dummies. They understand the necessity of the people being dependent on government.
Their little adventure into free markets and independent, individual action may have really scared those in power.
Then China can be shown the pictures of its not-so-wonderful country and its not-so-free people.
If someone of that country tried that with the US, the only response would be to give them a flood of pictures and video. Whether it be many places across their country being uninhabitable, company towns enforcing despotism, showing the bodies of various dead dissidents, or other unsavory & graphic details of China's unfree nature, it would raise one question:
"This is your country that you don't see and don't want to see, who are you to lecture the EU or the US?"
Then offer the same footage to the national networks in uncensored detail.
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