The world is worried about China's dilemma. What about our trilemma?

An outpouring of articles analysing the so called slowdown in the Chinese economy shows the level of concern in the world. The rate of growth in the Chinese economy since 1980 has never been seen in the world, sometimes reaching highs of 15%. The IMF predicts that the rate of growth will fall to 6.33% by 2020, which is higher than most other countries in the world. Export orders are declining, the yuan has become stronger against other currencies, making exports more expensive, and wages have risen, adding to costs. However, a 6% growth of a $10 trillion economy will generate greater wealth than an 8% growth in a $2 trillion economy, like India. So why the worry? It maybe because low cost Chinese goods helped in controlling costs in other countries, but mainly because China's insatiable appetite for commodities created wealth for countries, like Australia, Brazil and Indonesia. One third of Australia's exports go to China so its currency has fallen while Brazil is in a recession, with a high inflation and a falling stock market. The US or the EU do not care about the world when deciding monetary or fiscal policies so why should China care about the pain in Brazil or South Africa? Partly because these countries also buy Chinese goods and if their economies are suffering they will import less, but mainly because China's Communist Party loses face if growth slows down and the Party is terrified of social unrest. Chinese leaders want to move the economy away from exports towards domestic consumption but seem unsure of how to do it. They can order an increase in investments, lower interest rate to make loans cheaper or devalue the currency but how can they order people to spend more. Household savings are 48.87% of GDP compared to 30.02% in India and 17.88% in the US. Since 2007 spending on investment, as a percentage of GDP, has been higher than household spending. There is already excess capacity and productivity is falling. Consumption can increase only if people feel secure about their future which will come from assured pensions for everybody, free healthcare and income support for loss in earnings. Above all they must have confidence in their leaders, which is difficult because the Chinese government is highly secretive and their economic figures are highly suspect. It is like Indians buying gold because they do not trust politicians to serve the country rather than themselves and their families. The excess of savings gives enough capital to banks in case the shadow banking system collapses but the dilemma for the central bank is whether to increase lending and thus increase bad loans or control lending which will result in slower growth. At least a dilemma is better than the trilemma produced by the Congress in India. India has little exposure to China and it will be good if we buy less rubbish from it. For us a fall of China, our biggest enemy, is profoundly to be wished for.