Adolf Hitler ‘taught us how to preserve national identity’

Alarm sounds over anti-Chinese extremist groups in Mongolia who respect the Nazi dictator

ULAN BATOR

But with their dark eyes and brown skin, they are hardly the Third Reich’s Aryan ideal. A new strain of Nazism has found an unlikely home: Mongolia.

Once again, ultra-nationalists have emerged from an impoverished economy and turned upon outsiders. This time the main targets come from China, the rising power to the south. Extremist groups such as Tsagaan Khass, or White Swastika, portray themselves as patriots standing up for ordinary citizens in the face of foreign crime, rampant inequality, political indifference and corruption.

But critics say they target the innocent as scapegoats and attack them. The United States State Department has warned travellers of increased assaults on inter-racial couples in recent years — including organised violence by ultra-nationalist groups.

Though Tsagaan Khass leaders say they do not support violence, they are selfproclaimed Nazis.

“Adolf Hitler was someone we respect. He taught us how to preserve national identity,” said the group’s 41-year-old cofounder, who calls himself Big Brother.

Not all ultra-nationalists use this iconography; and widespread ignorance about the Holocaust and other atrocities may help to explain why some do.

Big Brother acknowledges he discovered such ideas through the nationalist groups that emerged in Russia after the Soviet Union’s fall. But the anti-Chinese tinge is distinct and increasingly popular.

“While most people feel far-right discourse is too extreme, there seems to be a consensus that China is imperialistic, ‘evil’ and intent on taking Mongolia,” said Mr Franck Bille of Cambridge University, who is researching representations of Chinese people in Mongolia.

Critics fear ultra-nationalists are becoming more sophisticated and, quietly, more powerful. The US State Department has noted increased reports of xenophobic attacks since the spring.

“They are getting more support from the public,” added Ms Enkhjargal Davaasuren, director of the National Centre Against Violence, who fears that ultra-nationalists are growing more confident and victims too afraid to come forward.

Others in Ulan Bator suggest the movement is waning and suspect the groups’ menacing stance and claims of 3,000 members are bluster. Mr Bille thinks there is “a lot of posturing”.

“We have to make sure that, as a nation, our blood is pure,” said 23-year-old Battur, a neo-Nazi, pointing out that Mongolia’s population is under three million. “If we start mixing with the Chinese, they will slowly swallow us up.”— Their right hands rise to black-clad chests and flash out in salute to their nation: “Siegheil!” They praise Adolf Hitler’s devotion to ethnic purity.

THE GUARDIAN

Balancing game of China’s HiGH Savings Rate

Fan Gang

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Countries that save too much export too much, according to conventional wisdom, resulting in high trade surpluses and growing foreign-exchange reserves.

But this is not always true. For instance, if I save $100, but at the same time I invest $100 in my factories’ fixed assets, I am “balanced domestically” and not running an export surplus with anyone.

Such an example captures China’s recent economic situation. Late last year and early this year, China’s savings rate might well have remained at 50 per cent of GDP had its trade surplus not narrowed significantly compared to previous years.

Indeed, China recorded a trade deficit in part of this period, as high investment in fixed assets (owing to government stimulus policies enacted in the wake of the global financial crisis) fuelled domestic demand for goods in the same way that higher consumer spending would.

Only when a country invests less in fixed assets than the amount that it saves will the “surplus savings” show up in the trade balance. The same logic can be applied to the United States economy, but in the opposite way: Even if the US wants to consume a lot and does not save, it may not run trade deficits if it does not invest much.

It runs a trade deficit only when it invests a lot while simultaneously not limiting consumption.

Savings are, of course, no bad thing. If Americans and Europeans had saved more, they might not have created the global imbalances that fuelled the financial crisis, or the worldwide sovereign-debt problems that have since emerged.

And savings are particularly good for developing countries. One of the most daunting challenges for poor countries is the need to accumulate investment capital under conditions of low savings without incurring too much foreign debt.

 hina’s national savings rate has been very high in recent years, amounting to 52 per cent of gross domestic product (GDP) in 2008 (the most recent year for which statistics are available), and is often blamed for today’s global imbalances.

WHY INVEST MORE DOMESTICALLY

Even for a developing economy with per capita income of US$3,000 ($4,000), such as China, building wealth in the middle classes remains a central issue. Spurring faster growth of small- and mediumsized enterprises through relatively high investment in physical assets and R&D programmes, improved infrastructure and more rapid urbanisation — all of which require a lot of savings to invest — is vital.

In any meaningful international comparison, China’s per capita stock of physical capital is still eight to ten times lower than in advanced countries like the US and Japan.

Without relatively high savings, a developing country like China may never catch up.

If a developing country has high savings (despite efforts to increase current consumption) as a result of structural factors, the best strategy is not to reduce savings through short-run “external shocks”, such as dramatic exchange-rate appreciation, which may kill export industries overnight.

Rather, savings should be channelled even more — and more efficiently — to domestic investment in order to avoid large external imbalances.

For example, China should use its current high savings to build up the country’s infrastructure and speed up urbanisation, thereby laying a firmer foundation for future development. Savings could remain high, even as current consumption grows slowly, while the trade balance would be held in check by higher demand for imported capital goods.

Moreover, investment in public infrastructure and urban facilities will not create industrial “over-capacity”; instead, it will provide long-term public consumption durables that households and companies will use for years to come. If China continues on this path, its external surplus will decrease further, other conditions being equal.

STABLE GROWTH REQUIRES CONSUMPTION

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Of course, a country must deal with a savings rate that is “too high” even if it is not necessarily the main cause of external imbalances.

That is certainly the challenge for China in the long run. A savings rate of 50 per cent of GDP is too high under any circumstances, and household consumption equivalent to 35 per cent of GDP is too low.

But this can and should be addressed by domestic policies aimed at bringing about structural change, not by external policies like exchange-rate appreciation.

Without domestic structural change, currency appreciation would not only undermine exports, but might also decrease imports, owing to higher unemployment and lower income.

China must recognise that high savings will not provide stable growth over the long run. High domestic investment may for the time being prevent “surplus savings” from creating too much upward pressure on the external balance, but, given trends in China’s terms of trade, growth without an increase in domestic consumption is unsustainable over the long run.

High investment may cause economic overheating and increase the price of capital goods in the medium term, eventually triggering inflation. So bringing the savings rate down is necessary if domestic and external balances are to be achieved.

Meanwhile, China’s so-called “export oriented growth policy” itself may not be wrong for a developing country, because international trade in general creates more jobs and brings more income. But if exports continue to grow in the absence of consumption-led import growth, distortions occur and the trade surplus and foreign reserves increase.

China has adopted some policies to reduce its trade surplus, such as lowering import tariffs, withdrawing tax rebates for exported goods, and gradual exchange-rate appreciation. But what China really needs is a greater effort to promote domestic consumption and lower the savings rate.

Project Syndicate

The writer is Professor of Economics at Beijing University and the Chinese Academy of Social Sciences, Director of China’s National Economic Research Institute, Secretary- General of the China Reform Foundation, and a member of the Monetary Policy Committee of the People’s Bank of China.