We seem to have had another one of those curious coincidences in the morning news that is likely to either amuse or depress depending on the economic straits (and possibly location) of the reader. In the context of the global economy, all eyes seem to be directed at the meeting in Washington (dubbed by some the "G2 Summit") between Treasury Secretary Timothy Geithner and Chinese Vice Premier Wang Qishan. In an introductory speech before the talks began, Barack Obama talked about how the United States and China will "shape the course of the 21st century;" but, when we take into account the backgrounds of those setting economic policy in the United States, we have to wonder whether or not Geithner is more concerned with the short-term recovery of Wall Street than he is with "the course of the 21st century."
China, on the other hand, seems to be looking at Main Street in planning its economic future; but it is not any Main Street in the United States. This assertion is based on a report I heard this morning on the BBC World Service; but to track it down I had to turn to that most notorious of "capitalist tools," Forbes. The Forbes Web site just released the following news from Great Britain filed by Vidya Ram:
Meet the British homeowner's newest lender: China.
Bank of China, one of the country's four, state-owned banks, is ramping up its lending business in the United Kingdom as British banks remain cautious in their lending.
The bank, which had already been offering loans to the Chinese community in the U.K., will begin offering mortgages for landlords, known in Britain as "buy to let" mortgages, tracking 3.5% above the Bank of England base rate. It is also offering regular residential mortgages at 2.5% above the 0.5% rate, a spokesperson for the bank confirmed in an emailed response to Forbes.
"Our aim is to translate the global strength of our branch into a household name in the U.K.," she added.
British lenders have been criticized for failing to step up their lending to boost the British economy, despite the pressure being exerted on them to do so by the Labor government of Gordon Brown. Gross mortgage lending in June was 48% below last year's figure, according to the Council of Mortgage Lenders' latest data.
"[British] banks aren't stepping up lending but focusing on shoring up their balance sheets," said Jane King, senior mortgage advisor at Ash-Ridge Private Finance in London. She added that the rates being offered by Bank of China were "extremely good" for tracker mortgages.
Thus, while consumer confidence continues to languish in the United States (at the same time that those in the financial sector were celebrating the Dow Jones Industrial Average rising about 9000), China is applying its financial reserves to the needs of ordinary British citizens trying to keep a roof over their heads. This is not to suggest that such practices will win those British citizens over to Chinese ideology; but, for now at least, the Chinese appear to be "taking care of business" on Main Street more sensibly that the interests of Wall Street are doing.