New York Times: As China Goes, So Goes …

A New York Times editorial offers an opinion on how China should respond to the current global financial crisis:

China is already feeling the impact of a slower world economy. Both economic growth and export growth have braked sharply. The slowdown threatens job creation, direly needed to absorb millions of rural Chinese seeking employment in the cities.

Over the summer the Chinese central bank put an end to its short-lived policy of allowing the yuan to gradually appreciate against the dollar, a policy aimed at reducing inflation that would also raise the price of Chinese exports. Last week, the Chinese government announced that it would increase its rebates on taxes charged to exporters — giving them a further boost.

But trying to capture a bigger share of shrinking markets in the United States, Europe and Japan — just as they tip into recession — won’t provide China much of an economic lift. What it will do is contribute to the slowdown in the rest of the world by hogging demand. China would get much more bang for the buck if it focused on stimulating its own domestic markets for goods and services.

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