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Capitals of Capital

NEW YORK – Recently, China’s government announced that it wants Shanghai to become a global financial capital equal to London and New York by 2020. An ambitious goal, which may or may not be achieved. But China’s aspirations also underscore a worrisome and increasingly pervasive new reality: political officials are making decisions normally left to markets on a scale not seen in decades.

Like the financial crisis itself, this trend is now global. Political leaders in dozens of countries are making decisions that will drive the performance of local (and global) markets for the foreseeable future.

In China, exports fell by more than 25% in February. Not to worry, said Premier Wen Jiabao: the Chinese government has “adequate ammunition” to add to its $586 billion stimulus package, a plan meant to create millions of jobs via enormous government investment in transportation, energy infrastructure, housing, and other large-scale projects.

In India, where government is more often considered a drag on commerce than a catalyst of growth, the decisions that move local markets are now more likely to come from bureaucrats in Delhi than from innovators in Mumbai. In fact, the Congress Party-led government, anxious to appear responsive to public demand for help during an election-year economic slowdown, has pushed forward three stimulus packages since December.