The Flip Side of Globalization
Add Singapore to the list of Asian economies flagging as exports dry up:
But as the world enters a period of deglobalization, Singapore is a window into the reversal of the forces that brought unprecedented global mobility to goods, services, investment and labor. With world trade plummeting for the first time since 1982, the long-bustling port has become a maritime parking lot in recent weeks, with rows of idled freighters from Asia, Europe, the United States, South America, Africa and the Middle East stretching for miles along the coast. “We’re running out of space to park them,” said Ron Widdows, chief executive of Singapore-based NOL, one of the world’s largest container lines.
Exports collapsed by 35% in the month of January alone and foreign workers, whether highly paid Europeans or uneducated South Asian peasants, are returning home.
There’s skepticism that China can fill the gap being left by the drop in consumption in Europe and the United States:
“Look, you can’t sell consumer products to the Chinese because they make everything cheaper there already,” Zarchi said. “Unless you have a fruit they cannot grow, a fish they cannot catch or medical equipment they cannot make — yet — then it’s nearly impossible. I don’t see how China can be our future. And yet, I don’t know what else will be either. The Americans? The Europeans? Not for a while.”
Apparently, news of comparative advantage hasn’t made its way to Singapore.
Speaking of China, China has quashed hopes that additional spending by the Chinese government would provide additional stimulus for the world economy:
NEW YORK — Stocks resumed their slide Thursday, as China deflated investors’ hope that the country will boost spending.
Chinese Premier Wen Jiabao said the government’s stimulus plan would help the world’s third-largest economy grow by 8 percent this year, but stopped short of promising new stimulus measures.
The hope that China would unveil more government spending was a major trigger for the stock market’s bounce Wednesday. The rally followed a five-day pummeling that left the market at its lowest levels since 1997.
The premier “had his Timothy Geithner moment,” said independent market analyst Edward Yardeni, referring to the U.S. Treasury Secretary’s speech several weeks ago that the market hoped would reveal details about plans for banks’ toxic assets. “He let everyone down.”
Despite the WTO’s prediction that China’s economy would grow 6.8% this year, below the 8% rate the Chinese authorities have said is necessary to maintain social stability in the country, in the same speech PM Wen announced that, coincidentally, China’s economy would grow at an annual rate of 8%. That’s one of the great things about a totalitarian oligarchy. When you need growth of 8% at 8% the economy will grow. Or so they say.
The picture above is of ships lying idle off the coast of Singapore.