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Två inslag om Kina överraskade mig ordentligt under de gångna dagarna.

Skrivet av Hubert Fromlet onsdag, 08 juni 2011.

Två inslag om Kina överraskade mig ordentligt under de gångna dagarna.

Det första är den svenska Kina-ambassadens offentliga varningar – rätt eller fel – avseende SAAB:s tilltänkta nya räddare Hawtai Motor Group. Det andra handlar om en svensk storbanks riskscenario för Kina (BNP-tillväxt 4-5%). En sådan utveckling kan givetvis inte uteslutas någon gång i framtiden – men kräver sannolikt också en politisk kraschlandning.

When I studied the newspapers the other day, I got really surprised when I could read the warnings from the Swedish Embassy in Beijing concerning the expected deal of SAAB with Chinese Hawtai Motor Group. The skepticism of the Swedish Embassy could be motivated since transparency in corporate China still has to be regarded as very insufficient.

This shortcoming is serious which I will discuss more thoroughly in a forthcoming discussion paper. Despite – or rather because of – this fact it seems to doubtful to have deeper thoughts about the real state of most Chinese companies.

Thus, the point is not really whether the Swedish Embassy is right or wrong about Hawtai – but whether an embassy may have the mandate and the competence to go into the analysis of a specific company and make the conclusions public, or not. This does not, of course, rule out informal corporate information to the Swedish market/companies from public Swedish institutions abroad. However, microeconomic analysis and decisions like the above-mentioned should be a management issue at the end of the day.

 

Since Swedish taxpayers – which nobody wants to happen – may be involved in the destiny of SAAB at a later point, it is certainly legitimate that the Embassy sends as much information as possible to Stockholm. But nothing should be published when it comes to single companies – which, by the way, also can provoke unnecessary bad – or in certain cases too good  – feelings on the stock market.

-  The other issue that made me react was the a risk scenario on China by a major Swedish bank with extremely poor GDP growth conditions around 4-5 percent. First, such a low GDP growth would mean a recession in the eyes of the Chinese. Second, if GDP growth was really heading for such a weak development, China without any doubt would stimulate the economy in order to avoid serious social distortions. Third, Chinese leadership would lose a major part of its legitimacy if economic growth was to fall back dramatically. Such a development is not acceptable for any Chinese leader.

Forth, if a 4-5 percent growth rate was to happen, this would probably assume a real political chaos or a another kind of meltdown.   Fifth,  a Chinese “recession”would have serious implications on the global economy which currently could not be covered by existing econometric models – at least if poor growth developments were more sustained  This is not an argument against predicted or thinkable low Chinese growth scenario per se. But the complexity of such a disappointing development in China would be much larger than markets can imagine these days.

 

Om Krönikören

Hubert Fromlet

Professor i internationell ekonomi vid Ekonomihögskolan inom Linnéuniversitetet i Kalmar.

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