Editor's Comment: Many have had questions about the posture China's Communist Party (CCP) will be taking toward the US and European economic crises and the working class under the party's new gemeral secretary, Xi Jinping. Those questions seem to have been answered by the words of Jin Liquin, the head of China's $480 billion Sovereign Wealth Fund when he sent a message to the European Union this week at a forum organised by Caixin Media, based in China. Jin expressed grave concerns about European and US debt crises, the US looming fiscal cliff, the massive protests across Europe against the austerity attacks and the "sloth-inducing" labor laws of the west.

China's sovereign wealth fund is one of the largest in the world and in May of this year, directors of the fund stated that it would no longer purchase European government debt. At that time, Gao Ziqing, then head of the China Investment Corporation indicated that although the fund was interested in investment opportunities in Europe, "We don't want to buy any government bonds." In his statements this week, noting the widespread protests against austerity measures in force across Europe, Jin Liquin stated that measures were too harsh and that, "The general public's tolerance of austerity has been stretched to breaking point." However, he also said that "the determination to carry on austerity should not be relaxed."

Jin's view of a more gradual application of austerity comports with Xi's first message as CCP's new general secretary. He stated that the people,

"... wish to have better education, more stable jobs, more income, greater social security, better medical and health care, improved housing conditions, and a better environment. They want their children to have sound growth, have good jobs and lead a more enjoyable life.”

Nice words but the with the shrinking Chinese economy, the CCP may not be able to deliver.  

His solution was a slackening of austerity and to make European workers work "a bit harder … work a bit longer."

Jin's words suggest that the new leaders of the Chinese Communist Party are on board with the capitalist ruling class of the west with respect to austerity and workers' rights. But three equally large questions remain. The first is what if anything can European capitalists now do to pacify an outraged public and at the same time pay off the enormous that they, not the people, created. The second is now that the people have risen en-masse against the European ruling class, will they accept anything short of an overthrow of the regimes that have wrecked their economies and the system that's entrapped them. The third question is whether China's 400 million workers will accept the "softer austerity measures" that Jin proposes for Europe when the loss of export markets in Europe and the US brings the economic crunch to China ... and that crunch has already begun.

- Les Blough, Editor

November 16, 2012
The Guardian
China sovereign wealth fund official warns on eurozone austerity

On Thursday, China unveiled the new leaders who will take charge of the world's most populous nation for at least the next five years. Xi Jinping was anointed the head of the Communist party and the head of the military.

A top official with China's sovereign wealth fund has issued a blunt warning that the latest unrest across the eurozone shows austerity has stretched the public's tolerance "to breaking point".

Jin Liqun, chair of the supervisory board of the $480bn (£300bn) China Investment Corporation (CIC), warned that undue harshness risked a backlash which could end with necessary economic reforms being abandoned.

Jin has been extremely critical of Europe's handling of the debt crisis, warning that authorities have taken a piecemeal approach and suggesting Greece should be given more time to work off its debt. But he has previously stressed the need for Europeans to "work a bit harder … work a bit longer" like Chinese citizens, complaining about "sloth-inducing" labour laws.

Speaking at a forum in Beijing on Friday he repeated his warning that governments had spent unsustainably in the past.

But he went on to warn that Europe was now seeing social and political unrest across several states.

"One commonality is that unions are now involved in organised protests; demonstrations and strikes. It smacks of the solidarity movement witnessed in the 1930s," he said.

"The general public's tolerance of austerity has been stretched to breaking point."

Jin pointed to the unemployment rates in Spain and Greece and added: "The worst case could be a complete discarding of austerity programmes. The fact the public are taking to the streets and resorting to violence indicates the general public's tolerance has hit its limits."

He went on: "The eurozone needs to strike a proper balance between austerity and growth. Austerity without growth is a cul de sac."

Jin also suggested that the European Central Bank should launch further unorthodox measures to help the eurozone, which is now officially in recession.

"Monetary easing is considered too radical but we believe it to be a practical move. The crisis is pulling the economy underwater.

"People need breathing space. People should be helped to implement austerity programmes."

Jin told the Guardian after his speech: "European governments should be given some time … If you ask the Greek people to slash their spending by 30-40%, it's not possible. So there should be some tolerance, but the determination to carry on austerity should not be relaxed. It is only the issue of how you can balance one against the other."

CIC is one of the world's biggest sovereign wealth funds and recently bought a 10% stake in Heathrow airport.

On Wednesday, Europe saw its biggest ever protests against austerity. There were general strikes in Spain and Portugal, walkouts in Italy and Greece, and demonstrations in hundreds of cities across the region. Demonstrators clashed with riot police in Milan, and rubber bullets were fired in Madrid and Barcelona.

• Jin was speaking at a forum organised by business magazine Caixin. The Guardian is a media partner of the event.

Source: The Guardian (UK)