It is good to see that China’s authorities are acting to put the squeeze on bank lending following the surge in property prices. It seems that China is no exception to the rule that ensures that excess money from lending, flows straight to the soft target of property rather than the hard, or at least harder, target of business and industry.
Of course, this is the seat of all our financial troubles and why the property bubble of the UK and the US collapsed, crushing the banks and all but busting the western economy. The difference is that China has been lending its own money, but we had to borrow it first to lend it on. If the Brown Treasury had not been seduced by the bankers and if the Bank of England had retained its traditional function of watchman of the banking sector, instead of the naive FSA, action may have been taken in the UK to stop things getting out of hand.
The price the country has paid for this abrogation of fiscal control will not only go on being paid for decades, but is paid by everyone, even the poor and the vulnerable. No wonder the Chinese authorities are on the job. It was on New Labour’s watch that the calamity happened, but it was the Tory frenzy for de-regulation which made it possible. Neither of the main parties has a clean slate on this, but at least the Tories, now in Coalition, have a plan. So far Labour does not fully understand what happened and therefore has no idea what to do. Ed Milliband needs to work on that.