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Thursday, April 24, 2008
Beijing sensitive to social unrest, slashes stock taxes

· 4/24/2008 03:50:00 PM ET · Link 
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This is a government who has major problems across the board. It's no wonder the leadership likes the Tibet situation, because it helps stir up nationalism and divert attention from even larger problems. While the communist government has done a commendable job raising the living standards for millions of people, they have also left millions behind. When an economy grows, so do expectations. Overall it's a good problem to have provided a government is reaching out to everyone. (In the US, we can also relate since the broad majority of Americans have been left behind for the last three decades.)

Since the Shanghai market has lost half of its value since last October, Beijing has delivered a typically knee jerk response - much like our GOP - and lowered taxes on stock. Just like in the US the tax cuts are going to a slim minority at the top and so far this has been well received. Will the good times last? Probably about as long as the GOP good times lasted though the end result in China will be more ground shaking than the meek response we tend to see in the US. Leaving tens or hundreds of millions behind in a country that has never had a peaceful transition from one system to the next should be a real reason for concern within the communist leadership. Bubbles burst, it's just a fact of life. How a country bounces back is the difference maker.

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