Bellerbys Economics - Mr Stephenson

Tuesday, May 16, 2006

China China

An update on news from China China:

1) Baidu.com has launched its own version of Wikipedia - called Baidupedia. You can find it here:

http://baike.baidu.com/

Working with Google, the Chinese government has built a firewall around China's broadband network which prevents access to any sites that are critical of the Chinese government, or which might promote 'negative or depressing ideas'. In economic terms, this represents a form of protectionism - opening up opportunities for companies like Baidu to create Chinese websites similar to western ones like Wikipedia, ebay and so on. A form of import-substitution.

It also raises the question as to why the US and UK governments consistently claim that they can't do anything about the wave of pornographic and gambling websites that dominate the Internet - the vast volumes of aggressive spam and so on.

2) Chinese consumption has finally begun to rise at a rate greater than economic growth - 13.3% in April as against 9.9% economic growth. We've been predicting this in class for months as the next phase in Chinese development - the growth of consumption - when Chinese people themselves begin to share in the rewards for the last 15 years of hard work.

The Chinese government has called this new policy - 'Two Legs not One' - there must be a whole Government department that dreams up these strange policy titles - the Four Pillars of Progress, the Eight Noble Truths and so on.

It's a good move, however, there will be some trade diversion away from exports towards domestic consumption which will reduce the current account balance a little, reducing some of the criticism from the US.

3) Okay, not China - but still interesting. Vietnam and the USA have now signed an agreement on Vietnam's membership of the WTO. This should mean Vietnam will join the WTO very quickly now as the USA was the last big obstacle.

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