National People's Congress

Today China's national congress opens its session. We will see a surge of reports and new policies over the coming two weeks emerge from this year's session. The focus will be on the economy.

A comment from Today's China Daily signals the primary economic policy:

"National Committee members from the non-public sector of the economy should be encouraged to shoulder their share of social responsibilities," according to the Report on the Work of the Standing Committee of the CPPCC National Committee.

This is code for asking the private sector NOT to pay off workers and staff in the current downturn. The problem with this "request" is that private industries are not being given government subsidies or incentives to retain their workforce. They are not being given bank loans under the new looser lending policies.

The result of this policy could be a new round of friction between government-backed enterprises and private enterprises. When the tide is helping all boats rise private industry is the hero. When the tide recedes private industry is asked to be socially responsible. The friction is obvious.

In the US the government is bailing out the private sector - Autos, Banks, Wall Street...

In China the government is backing state owned enterprises with ready capital and cash and asking private industry to tighten its belt and "help out."

The result in a few years could be a stronger government controlled economy in both China AND the US. This could mean that both the US and China economies will under go dramatic change...For private businesses this means that working wth government stakeholders will become much more important than in the past !