Thread: The empty rhetoric

The wonder of Hu

Published: December 6 2009 19:20 | Last updated: December 6 2009 19:20

When challenged to conjure a sentence that was grammatically sound but entirely without meaning, Noam Chomsky came up with: “Colourless green ideas sleep furiously.” China’s Central Economic Work Conference, which convened at the weekend to debate plans for the coming year, should produce some similarly senseless utterances. Guidance from President Hu Jintao’s Politburo was a classic of the genre: fiscal and monetary policy would emphasise “continuity and stability”, while enhancing “flexibility” to adapt to “new situations”. Ditto on the currency: last week Premier Wen Jiabao said China would “increase yuan flexibility while maintaining a stable yuan exchange rate”. Come again?

It is perhaps unfair to pick on China: other policymakers specialise in doublespeak and evasion (just how extended is Fed chairman Ben Bernanke’s “extended period”?). But it is a fair rule of thumb that the emptier the rhetoric, the trickier the outlook. Back in March 2007 Mr Wen was cocksure enough to pronounce the Chinese economy “unstable, unbalanced, unco-ordinated and unsustainable”. Now, the syntax remains fine but the semantics less so. Only in China could Rmb10,000bn of new bank loans – double the run-rate of the preceding few years – be termed “moderately loose” policy.

China will be the only one of the world’s top 10 economies with a higher real gross domestic product number this year than last – an achievement in itself. But in 2010 and beyond, the costs of that achievement should become more obvious. Investment in fixed assets accounted for 95 per cent of GDP growth in the first nine months, for example. And yet China’s 2009 Incremental Capital Output Ratio – a measure of spending efficiency, calculated by dividing gross investment to GDP by real GDP growth – will be less than half as efficient as its own average of the 80s and 90s, says the International Monetary Fund. No subtitles needed.

FT.com / China - The wonder of Hu