Daily Archives: October 20, 2011

The humiliating death of Muammer Gaddafi, gunned down and apparently dragged through the streets of his home town Sirte, would seem at first sight to be a final punctuation point in the tumultuous change of power in Libya. Finally, Libyans can breathe easier knowing this monstrous and unpredictable figure is gone from their lives.

But his shadow will only be truly lifted if the new Libyan leadership draws the right lessons, not the wrong ones, from his demise. The right lesson is that it is a cathartic moment that clears the ground for Libyan politics to move forward. The wrong one would be to assume that with the death of Gaddafi all those supporters, whose reasons for so tenaciously defending Sirte are now clearer, will fall in line behind the new government in Tripoli.

If the manner of his going is interpreted by part of the country or the region as a crude revenge – as a summary execution not a combat death, let alone the result of a proper justice process – then it could revive, even in death, Col Gaddafi’s power to divide. Martyrs cast long shadows.  

Concerns about a hard landing resurfaced earlier this week as China reported a lower-than-expected growth rate in the third quarter.

The fundamentals of the country’s economy, however, remain robust. In spite of the problems surrounding small businesses in the south, industrial growth only moderately eased. Consumption growth has remained strong.

Yet in spite of the years spent calling for structural adjustments, the Chinese economy still relies heavily on the export sector to generate growth. The slowdown in global demand should now be a loud wake-up call for China to take real action to rebalance its economic structure. The robust growth of the domestic sectors amid the global weaknesses is an encouraging sign that healthy growth can be maintained by the country’s economy. 

That China’s third quarter growth rate of 9.1 per cent, just marginally below forecasts, would spark a sell-off in the markets says a lot about the gloomy state of the global economy. Analysts have not yet decided whether a rate below expectations is good or bad, given the concerns about inflation.

Ostensibly, Beijing’s goal is to manage a “soft landing”. But even at home, many have not fully accepted the premise of the current five-year plan that slower, but higher quality growth, averaging seven per cent, is better. Making a credible case for slower means challenging the traditional objectives that have preoccupied China’s leaders during the post-Mao reform era. Two targets have been sacrosanct – price stability and employment generation – with the understanding that rapid economic growth makes them more achievable.

But times have changed. China’s needs now are very different to what they were a generation ago. Beijing and the rest of the world need to be more relaxed about China’s declining growth rates provided that the process is managed well – which, of course, is a big if.