1 Dramatic change in China’s growth drivers (Linda
Yueh on BBC) Probably the least surprising thing about China's GDP growth rate
for the first three months of the year is that it slowed to 7%. What's more
surprising are the drivers: consumption more than investment, services outpacing
manufacturing, and domestic demand rather than exports. The full year picture
for 2014 shows that China's growth drivers are changing.
Consumption contributed 3.8 percentage points to
2014's 7.4% growth rate, which is more than investment which accounted for 3.6
percentage points. Net exports - so exports minus imports - contributed
nothing. Consumption has risen to account for more than 50% of GDP, which is a
sizeable increase from 2009's 35%, and finally places China in the realm of
market economies where consumption is between half to two-thirds of GDP.
It mirrors the rise of the services part of the
economy, which includes non-tradeables like haircuts, becoming larger than
manufacturing that included many exported goods. Indeed, industrial production
in March expanded by 5.6%, the slowest on record, which was significantly
outpaced by retail sales, which grew at over 10%.
This is what China has been trying to achieve - a
re-balancing of its economy away from excessive reliance on exports and
investment and more on its own middle class consumers and expanding services. Growing
more through consumption and services is similar to the growth drivers of
developed economies such as the US and Europe. So, China's re-balancing also
marks the beginning of the end of a period of rapid growth that is based on
industrialisation.
Still, any slowdown poses risks. For China, it is
notably in terms of real estate and investment which may be slowing down too
quickly and poses a risk for banks. Commercial developers are leveraged and
there are reported difficulties in leasing office space. House prices have
fallen across the country and requirements have been loosened for mortgages. The
US growth engine looks like it's coming back, and it's certainly not too soon
as the era of rapid growth in China comes to an end.
2 Europe dithers in the face of migrant wave (San
Francisco Chronicle) An unprecedented wave of migrants has headed for the
European Union's promised shores over the past week, with 10,000 people making
the trip. Hundreds — nobody knows how many — have disappeared into the warming
waters of the Mediterranean.
Amid these scenes of desperation, none of the 28
nations from the world's wealthiest trade bloc has pledged a single ship, a
single plane or a single cent to add to the rescue efforts. With the spring
crossing season kicking off, the EU has no relevant legislation in the works,
and no emergency meeting on the agenda.
Instead, the EU says it will unveil a migration
agenda for discussions by the end of May and draw up a report by Christmas. The
EU acknowledges it doesn't have a plan for the humanitarian catastrophe. There
is no appetite to launch an emergency operation, like Italy did in 2013-14 when
migrants started drowning in big numbers.
The 28 EU nations have long argued about how to
share the burden that migration places on the continent. Italy, Greece and tiny
Malta are bearing the brunt of the influx. Germany and Sweden are accepting large
numbers of asylum seekers. The EU's own institutions, so often the first target
of scorn, are hamstrung unless the member nations agree that forceful action
should be taken.
According to the UN's refugee agency, 219,000
refugees and migrants crossed the Mediterranean last year, and at least 3,500
died trying. The numbers crossing in the first two months of 2015 were already
up by a third over the same span the previous year, according to the EU's
Frontex border agency. The EU has of course spent money on defending its
borders — it spends 90 million euros ($96 million) a year on its Frontex border
agency.
3 Belied expectations and the xenophobia in South
Africa (Johannesburg Times) When the economy heads south, the first targets are
foreigners, who are blamed for job losses, crime and an assortment of other
societal challenges that locals can rattle off.
In 2012, Nigerians cried xenophobia when Ghanaians
closed their businesses in that country amid claims that they took jobs from
locals. In Libya, black Africans have come under attack from locals who accuse
them of flooding their cities with cheap goods. Things became worse when the
West imposed sanctions on the Gaddafi regime and the economy took a dive.
African migrants were the first to be targeted and driven out of the country.
Today South Africa finds itself in the same space.
The poor are fighting for economic space and the situation is getting worse as
the economy falters. Although there can be no excuse for the violence meted out
against foreigners the tension on our streets should be viewed holistically.
Why are these xenophobic incidents happening in
areas that are mostly poor? Why are only Africans targeted? The answer lies in
the economic mess the poor find themselves in. The scramble for resources and
the naked class divide lies at the root of what we see today. Immigrants who
live in affluent suburbs and who can afford decent housing rarely become
targets of xenophobia.
King Goodwill Zwelithini, who has been accused of
sparking the xenophobic outbreak through a reckless comment, holds the key
today. The pattern these attacks have taken suggests that his leadership is
more urgent than that of other politicians. President Jacob Zuma and his
ministers must come up with real solutions and stop their egg dance.
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