Tibet may be important - but so is the world economy

Today China cancelled the long-planned EU-China summit because French President Nicolas Sarkozy was planning to meet the Dalai Lama later in the year. Such short-sightedness serves no one.

Though it appears to be shielded from the financial tumult, China will eventually be hurt by the current crisis. China needs 9-10% growth if it is to absorb 24 million new labourers a year. To keep this rate of expansion, China’s economy relies on exports, real property growth and government spending. But US and European consumers can no longer consume at the debt-supported levels they have at the past. When exports market disappear, normal economies rely on domestic consumption. But China has no domestic consumption to speak of. So a slump in exports means factories closing, and people getting laid off. It also means a downturn in real property growth, as new construction is likely to decline.