Strange days as the President of the United States needs to reassure China that we’re not defaulting on our debt:
“There’s a reason why even in the midst of this economic crisis, you’ve seen actual increases in investment flows here into the United States,” Mr. Obama told reporters. “I think it’s a recognition that the stability not only of our economic system but our political system is extraordinary.”
He added, “Not just the Chinese government, but every investor can have absolute confidence in the soundness of investments in the United States.”
I don’t know if this was the intention, but the highlighted portion serves as a reminder, I think, that the Chinese leadership almost certainly has a bigger problem on their hands than the performance of their investment portfolio. It’s an authoritarian system that even before the crisis was suffering from a fair amount of protests and political unrest. Conventional wisdom twelve months ago was that the regime’s stability was based on its success in delivering economic growth. And now it seems they may not be able to deliver much in the way of economic growth. And that’s not just an economic problem, it’s a political one.
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