Spend to save

THE OUTLOOK: "Asian Nations Revisit Safety Net in Effort to Bolster Spending," by Patrick Barta, Wall Street Journal, 27 July 2009.

Important positive sign on the rebalancing-the-global-economy front.

This piece says the OECD standard for social expenditures is only 20% (not 25% as recorded elsewhere recently). China is listed at under 5%. The savings rate in China is a bit over 50% of income, and a primary cause is that only 30% of Chinese elders get a pension and only 20% of the unemployed get benefits, so you hedge against hard times if you're Chinese.

So China is pledging medical coverage to 90% of its 1.3B within three years.

But don't expect any huge plus-up in consumption to occur in the near term. These things take time.

Still, the direction is what matters, not the degree, and it's good.