In the News

It has been interesting to witness how a Communist government frames issues in the news. The positioning of the Chinese government in the midst of the financial shakedown that is happening across the globe has been particularly amusing.

On the news programs, officials indicate that China's economy is strong and should still see an annual growth of its GDP of around nine percent. In fact, the thought is that China should be the foundation of the financial markets rather than the United States. Yet, 2.4 trillion yuan has vanished this year in China's market. The next evening, there is a story regarding the closing of factories because of the reduced demand, particularly from the United States. In Guangzhou, toy factories are closing because the orders from Disney and Mattel have dried up. Most of their demand, 70 to 90 percent, is from these companies. Management cannot be found and employees are left stranded without having been paid.

The housing market is also in a slump. The real estate bubble is evident here, too, and housing prices are expected to fall 10 to 20 percent. Primary housing would be apartments as houses are not within the realm of the majority. As prices have escalated, affordable housing is in demand. To stimulate the housing market, the government will implement changes on November 1 to mortgages. The stamp tax will be eliminated and the contract tax will be reduced from 1.5 to 1 percent. Down payments, which in the past needed to be 30 percent, now will be lowered to 20 percent. All of these changes apply to what the government classifies as "ordinary residences," which account for only 20 percent of the total. Their residential classifications are based on square meters. The down payment reduction is thought to be the most significant measure to reduce the entry barrier.

'Perception is reality' is evident with the interpretation of business practices, too. Microsoft announced that is was cracking down on counterfeit software by beginning a blackout of the program when updates were requested. Counterfeit programs of Microsoft abound over here; in fact, that is what is on the computer I use in the faculty office. In China, what is yours, is theirs. An article in the newspaper had the position that what Microsoft was doing was illegal; that it was violating laws and was following practices of a monopoly. There was no mention of the violation of copyright laws; but then in China, there is no such thing.

With the debate in the presidential race in the U.S. regarding the degree of regulation wanted by businesses and consumers, and how deregulation of the financial markets may have spurred the financial meltdown, it makes one think what is the right answer that balances support with protection without the pendulum swinging in one direction or the other.