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The constructive contribution made by the G-20 meetings of leaders towards building agreement on economic and other policies for peace and progress in the global economy. The meetings were especially useful for coordinating policy and addressing issues arising in the global economy after the 2008 financial crisis. Here Li Baodong, China's vice minister for international organizations and conferences, international economic affairs, describes the path ahead: IMF reforms implementation, better coordination of macroeconomic policies, pursuing the anti-protectionist and free trade policies with further support to the WTO and ministerial MC9 meeting in Bali in Dec. 2013, and infrastructure financing proposals for developing countries on the agenda at the St Petersburg, Russia, G-2- meeting in Sept. 2013. Baodong says the mechanism called the Framework for Strong, Sustainable and Balanced Growth as part of the G-20 meetings is a major achievement. Each G-20 economy submits it macroeconomic policy plan for a Mutual Assessment Process under this arrangement. The progress from the Bretton Woods financial architecture to the new arrangement- from the G-6 to the G-20 to include developing countries from India to Mexico and Brazil- is another major achievement, not fully recognized by the public, says Baodong. Interestingly Baodong makes particular mention to global rebalancing, rather than pushing what he calls the impossible task of increasing demand to get growth. This is a realization coming to China's economic policymakers under the new Jinping-Keqiang administration after the overly aggressive effort to stimulate demand in the 2009-2011 Stimulus, and the ensuing financial problems in the banking and credit system. It is indicative of the policy shift and its implementation underway in China in 2013-2015....

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Some manufacturing towns have done worse than others during this period of a surge in Chinese imports. Dunn, North Carolina is one of these towns. It is 40 miles south of Raleigh. In the 10 counties clustered around Raleigh factory employment declined by 40% between 1990 and 2007. Per capita cost of government payments for benefits such as unemployment insurance, food stamps, increased by 74%. Cleveland by contrast was relatively insulated and adapted to the imports by moving into areas of manufacturing that required more technology and complexity. Autor and Hanson studied 722 county clusters throughout the U.S. to discern the impact of the surge in imports and free trade.

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Japan's central bank, the Bank of Japan, is under pressure from the government to do more to address deflation and the appreciation of the yen. The central bank increased purchase of government bonds to 10 trillion yen ($124.7 billion) in February 2012, and set a goal of 1% inflation. A senior cabinet ofice official attending the central bank policy meetings of April 9-10, stated that the government expects the Bank of Japan to "promptly" achieve the inflation rate of 1%.

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Geithner in written testimony to the Senate Finance Committee, stated that "President Obama - backed by the conclusions of a broad range of economists- believes that China is manipulating its currency." What is noteworthy is that experts are generally in agreement that something should be done about this in cooperative fashion, from Obama's economic team, Obama's own views on this, The National Association of Maufacturers, Labor and so on. The trade deficit with China has continued at high levels even with the current economic slowdown, so this issue remains as one that the Bush administration never really addressed. Simon Johnson, a MIT Professor, and former IMF Chief economist says that even the IMF has not addressed it, and that the Obama administration needs to call China to account. He says this could lead to a spat with China, and if the US does not back down to a row. The concern has been that China would not buy up Treasury debt the way it has in the past, at the same time the question is whether there is some point where the deficit is so large and the US so dependent on foreign buyers of Treasury debt, that it needs to be addressed on a number of levels. Including addressing currency and fair trade issues, a more rational balanced consumption of everything from oil to goods from lowcost Asian countries, to reduce the toll on the overextended American consumer and on the extent of US borrowing needed. From China's perspective there may also be the same concern about export led growth, which may come to be seen as undependable anyway, because with or without some currency advantage the overextended US consumer is not buying anyway, holding off on purchases of everying from cars to flatscreen televisions. With growth at 6.8% in 4th quarter 2008, according to the Chinese Government Statistics Bureau, and expected to drop to 5% in 2009, the export growth model is no longer the panacea for China's unemployed as it once was at 12-13% growth rates in 2006-2007. In fact it may now look to be a better wiser policy if China had increased the value of its currency even more than its slow gradual approach to slow the growth rate from 12-13% to a more sustainable 9-10%, and lower American imports and lower the American trade deficit. Part of the problem in China was the difficulty of applying any sort of brakes once the local governments were set free to expand as much as they could, and prevented any controls from being effective. Steel production continued to grow even after there was evidence of large overcapacity, and government direction failed. Buy some time to shift to domestic consumption based recovery, is what the Chinese policy may be now. Indications of this are evident with its grappling at the issues it has not tackled like giving ownership of land to farmers in rural areas, and to building a healthcare system for the country, both of which are part of a host of issues to shift to domestic consumption based recovery. So unlike the way the media and some experts portray it its not a tough line that the US is taking against Chinese unwillingness. China may want to cooperate.That may be true if China was missing out on 10-13% growth rates, but these were unsustainable anyway and bad policy. At growth rates below 5% as projected by analysts China may want to jettison the export model of growth and build an alternative one. In that case as China shifts to domestic consumption, currency adjustments may be seen quite differently than they were in the past....

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The risks that China could be stuck in middle income status- plateauing similiar to countries like Mexico in middle income status- grow as China's remains stuck in a state enterprises driven model of growth at the expense of consumers and savers. Japan reached the level of development China is in today in 1970, Taiwan in 1980 and South Korea in 1990. Progress from now on depends on innovation and developing a more open society as shown in the experience of Japan and South Korea, which requires a shift away from most bank lending and funding investment going to state owned enterprises and towards private enterprises and tech startups. The resulting overbuilding has led to a vast misallocation of resources and starving new private enterprises of the large amounts of capital needed. Porter describes the lower level of rural education which has not kept up with the pace of improvement in urban schools, and which poses problems for the future, including a shortage of skilled workers.

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In the first quarter of 2011 consumer demand for gold in China increased by 47% over the prior year quarter to 233 tons, according to the World Gold Council's data. Most of this is for jewelry accounting for 64% in 2010, with gold bar demand increasing as an hedge against inflation. Orlik points out that if inflation decreases from the existing level of 5.3%, and with the increase in wealth management products from Chinese banks, the demand for gold may not be sustained as it offers no return. He says urban resident demand may have reached its peak and there is not much demand from the rural population. Central bank purchases to shift a small part of foreign exchange reserves to gold is the only other factor for a push up in gold prices.

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A sharp decline in gold prices in 2013 of 19% by October 2013 as central banks in developing economies cut back on holdings of gold. Emerging market economies such as Russia diversified their foreign exchange holdings by buying gold in the period following 2009. With depreciating currencies, efforts to intervene in currency markets and need for foreign exchange as growth slows, central banks in developing economies have cut back on gold purchases. In 2013 central banks are expected to reduce goldbuying by 34%, according to Thomson Reuters GFMS. Private investors fearing rising inflation as the U.S. Federal Reserve loosened monetary policy also increased purchases of gold in this period. With inflation remaining low in 2013 the interest in gold is declining, especially as it does not offer any return and alternative invesments are becoming more attractive.

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Anecdotal evidence such as huge jewelry sales in Hong Kong and smaller repatriation of funds earned overseas by Chinese companies suggests outflow of funds from China is picking up. Also the quarterly pace of accumulation in foreign exchange reserves dropped by 74% over the course of 2008. In he 4th quarter 2008 it reached $40.45 billion, lowest point since 2004. Chinese government may be slowing its purchase of Treasuries. And policy may be shifting away from letting the yuan to appreciate as export industries are hit hard by lower foreign demand.

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MacKinnon argues that (while correcting the trade imbalance by American consumers increasing savings over time and becoming frugal), the stable exchange rate for the yuan and the dollar helps global economic growth by making it possible for China to engage in fiscal stimulus beyond the half trillion dollars it plans for 2009. From the Chinese point of view anchoring the yuan to the dollar at a stable exchange rate help China's internal price level. After the inflation rate exploded to 20% in 1993-95, the fixed rate anchor helped China regain price stability. The China stimulus in his words is most effective with a stable exchange rate.

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Global imbalances in savings had alot to do with the current economic crisis, says Prof. Richard Portes of the London Business School, and president of the Centre for Economic Policy Research. See graph that shows net cross border flows doubled from 1997 the year ogf the Asian financial crisis to 2008. By 2008 these cross border flows from Asia to the West reached 3% of global GDP. This says Portes was what was ultimately the cause of the crisis, as it enabled bankers to be reckless and mortgage lenders to be reckless with all the extra money in the American banking system.

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Simms looks at the Plaza Accord of 1985 and the 60% appreciation of the yen, the lowering of interest rates and the real estate bubble that followed, and what this tells China's economic planners about managing the renminbi. A academic member of the People's Bank of China, Yu Yongding, sees one of the lessons as how Japan mismanaged the aftermath and creation of the asset bubble. There may be different complexities in China's situation with the increase in local government debt and loans in the shadow banking system, so that China cannot become complacent.

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Total household debt in Thailand at $306 billion in the second quarter of 2014, or 80% of GDP, is twice what it was in 2010. A assistant governor of the central bank expects sharp decline in spending rates. Low water level in dams is likely to affect the agricultural economy. The slowdown in China is lowering Thai exports. The result is a sharply slowing economy with growth expected at 1.5% for 2014.

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China is not experiencing high unemployment in 2012 the way it did in 2009. The lower growth rate of 7-8% is not having an adverse impact on unemployment. This makes it possible for the stimulus this time to be much smaller. There is rising upward pressure on wages. According to the National Bureau of Statistics, CEIC and WSJ, average annual wages at private sector manufacturing companies in current U.S. dollars was up 5% in 2009, 16% in 2010, and 20% in 2011. This is being encouraged by the government as China gradually shifts its economy towards higher domestic consumption and better standards of living for workers. Hon Hai Precision Industry Company added 82,000 workers in China in 2011. Salaries at the Shenzen plant were 2200 yuan or $345 a month in February 2012, an increase of 10%. An April survey by Manpower Group showed that a majority of companies will increase workers or hold employment stable, only 3% of companies will have job cuts. Demographic changes are also playing a part-with fewer people in the 15-19 age range, dropping from 120 million in 2005 to 95 million in 2015, according to UN estimates. The number of migrant workers remains steady at 252 million in 2012, up 4% from 242 million in 2010, according to the Bureau of National Statistics....

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Huge losses sustained by sovereign wealth funds. Estimated $350 billion for Gulf foreign reserve funds and SWF's, according to RGE Monitor's Rachel Ziemba, or 27% of assets. Sovereign Wealth funds are either using their funds for supporting their local banks as in the Gulf areas, or buying back stakes of cash strapped western banks like RBS in the case of China. Russia, China and other countries are using their SWF's for stimulus spending. And Russia, Gulf economies that are dependent on oil prices, are looking at possible sale of foreign assets at oil prices between $50 and a deterioration to $25. Only China has a surplus that is sustained through the last quarter of 2008, but this is changing quickly as imports pick up after the stimulus kicks in, and exports drop precipitiously in 2010. South Korea and Russia have also learned of the need to have liquid safe investments preferably in dollars in the current crisis, as they have learned how large capital outflows can get in a short time. And the US is not looking at these large capital inflows from overseas as a benevolent thing, because it overvalues American assets, and leads to all sorts of distortions in liquidity and pricing of risk that contributed to the current crisis. In short the whole situation with SWF's has a suprising ending, as with everything in the current crisis, nothing worked out as expected or planned....

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Andy Grove makes this passionate plea for the dignity of workers in America in 2010. It is worth reading in 2020 what this founder of Intel Corp and pioneering spirit of Silicon Valley has to say. Andy Grove of Intel says there is something seriously wrong when the unemployment rate in the Bay Area is higher than the 9.7% national average for the USA. American companies have added jobs like crazy in Asia, but things are sputtering back home. Hon Hai has 800,000 employees and makes most of the electronic and computer products for American companies. Grove says startups are not the answer, unless they scale up and create jobs the way Intel did starting back in 1968, with a $3 million capital infusion by investors. The move from the first production model to mass production is critical, as companies hire thousands of people. Innovation and scaling up have to go together. He makes his point clearly by pointing out that Apple has 25,000 employees. For every Apple employee there are 10 employees in China working on Apple iMacs, iPods, iPhones. And he adds that the same 10 to 1 relationship applies to other U.S. tech companies. And here Grove asks the tough question by first posing an answer. He says it sounds like- no big deal, we keep the high paying jobs, we keep most of the profits, but what kind of society are we going to have with highly paid professional workers and lots of people unemployed? And he doesn't mention that there are a lot more young people unemployed. He says the US has become very inefficient at creating tech jobs, and it would be a great mistake not to act decisively early on. And adds that the investments in such areas as solar power and electric car batteries have to be made early on to maintain leadership in these areas. Grove faults academics like Alan Blinder and others who say loss of manufacturing jobs and whole industries was no big deal. The U.S. has forgotten the value of manufacturing jobs. He wants to see America focus on jobs and rebuild its industrial base. And less of transferring engineering knowhow and new technologies overseas, technology that can help bring innovation and scaling up of factories at home. In his view individual companies doing their own thing, in a misguided fashion that jobs don't matter, is not the answer to the situation we face. The industrial economies of Asia, China at the present day, have focussed on jobs and technology, and scaled up. Grove reminds readers of the situation in America in 1932, when jobless veterans demonstrating outside the White House in large numbers were dispersed by soldiers with live ammunition and fixed bayonets. This makes him shudder at the very thought of it, and brings back memories of his early years in Hungary, as a young man in 1956. Are we listening? ...