Initial reports of market changes usually minimize the actual effects which follow. This happened with the dot.com and real estate booms in the U.S. The actual changes more resembled a crash than a minor, gentle pullback.
Here they are pointing at growth going from 11% to 9%. But look at the things that are changing and note that these are not just some numbers but that unpredictable human emotions play the major role in any economic downturn (or upturn) .
Chinese factories reported a plunge in new orders last month. Exports are barely growing. The real estate market is weakening, with apartment prices sinking in southeastern China, the region hardest hit by economic troubles.
While there are virtually NO economists that would say that central, government-managed economies run well or efficiently, here is the NYTimes saying that China is doing a great job:
How Chinese authorities manage a slower economy, and its effect on China’s 1.3 billion people, will be a test for the regime. It seems to be responding quickly.
A Politburo meeting on July 25 replaced the previous national economic goals, preventing overheating of the economy and controlling inflation, with new targets. As enunciated by President Hu Jintao in recent appearances, the objectives now are to seek fast and sustained economic growth while still keeping inflation under control.
Including manipulating it's currency which has been widely criticized as being an unfair tactic that allows Chinese goods to underprice their global competitors . Aren't Globalization and free trade great !?For example, after letting China’s currency rise sharply against the dollar in the first half of this year, China’s central bank has actually pushed it down against the dollar in each of the last four trading days, including a decline of 0.13 percent on Monday. This is helping to preserve the competitiveness of Chinese exporters in foreign markets, although at the risk of angering the United States and other trading partners.
And subsidizing their industries. Aren't Globalization and free trade great !?
In the last several days, Chinese authorities have also raised export tax refunds for garment manufacturers — an industry previously slighted by regulators, who remain more interested in promoting higher-tech industries.
And they have a nascent real-estate bubble that may be imploding soon. No doubt this will be blamed on America as a consequence of our meltdown and the worldwide credit crisis. oil skyrocketing and subsequent economic meltdown.
More serious for the broader Chinese economy are signs that the real estate market is weakening after years of climbing prices that had prompted warnings of a possible bubble. Here again, the biggest trouble seems to be in southern China.
Min Hwa, a real estate broker in Shenzhen, a city of at least 12 million people near Hong Kong, said that residential real estate prices dropped by 10 percent over the last year in desirable neighborhoods near the city center and nosedived by up to 40 percent in outlying neighborhoods.
Lastly, they are suffering coal shortages to generate the electricity to power their industries.Cheap energy is the basis for driving the global world economy and if we are indeed entering a period, short or long, of expensive energy costs, then the current globalization model is bankrupt.
Booming China Suddenly Worries That a Slowdown Is Taking Hold
HONG KONG — Many Chinese have been expecting a post-Olympics economic slowdown, but it has already started and the Games have not even begun.
Chinese factories reported a plunge in new orders last month. Exports are barely growing. The real estate market is weakening, with apartment prices sinking in southeastern China, the region hardest hit by economic troubles.
The trends, which actually have little to do with the Olympics (the Games themselves, which open Friday, are small compared with the size of the economy), are being felt worldwide.
China’s slowing growth is one reason that gasoline prices have fallen in the United States, for example. Similarly, world prices for metals like copper, tin, zinc and aluminum have tumbled in the last several weeks, as voracious Chinese factories have closed, or cut back their consumption.
But while China’s difficulties may reduce inflationary pressures around the world, they threaten to slow further the already tenuous global economic growth.
“China has slowed down a lot already, but it’s going to slow down more,” said Hong Liang, the senior China economist at Goldman Sachs.
Economists expect growth to slip from its recent pace of 11 percent or more annually to as low as 9 or 9.5 percent over the coming year.
Most nations would envy that rate. But 9 percent growth will make it much harder to supply jobs to the millions of Chinese moving to cities from rural areas in search of work. And any slower growth could prove a shock to workers who have been receiving double-digit pay increases each year, as companies struggle to find enough labor to keep factories open.
How Chinese authorities manage a slower economy, and its effect on China’s 1.3 billion people, will be a test for the regime. It seems to be responding quickly.
A Politburo meeting on July 25 replaced the previous national economic goals, preventing overheating of the economy and controlling inflation, with new targets. As enunciated by President Hu Jintao in recent appearances, the objectives now are to seek fast and sustained economic growth while still keeping inflation under control.
“We must maintain steady, relatively fast development and control excessive price rises as the priority tasks of macro adjustment,” he said on Friday at a rare news conference.
Having put a series of brakes on the economy over the last five years to keep inflation under control, Chinese policy makers are now removing some to prevent growth from slowing too much.
For example, after letting China’s currency rise sharply against the dollar in the first half of this year, China’s central bank has actually pushed it down against the dollar in each of the last four trading days, including a decline of 0.13 percent on Monday. This is helping to preserve the competitiveness of Chinese exporters in foreign markets, although at the risk of angering the United States and other trading partners.
In the last several days, Chinese authorities have also raised export tax refunds for garment manufacturers — an industry previously slighted by regulators, who remain more interested in promoting higher-tech industries.
Policy makers have also reportedly moved to ease lending limits on banks.
Weak demand from the United States over the last year, and now from Europe as well, is part of China’s emerging problem. On Sunday evening, the port here was less full of containers than usual, part of a broader slowing of export growth.
This weakening of exports has been particularly true of light manufactured goods from southeastern China, one of the country’s two main export areas, along with the Yangtze River delta region around Shanghai.
At Union Bags, a luggage maker in Dongguan, about 40 miles up the Pearl River from Hong Kong, sales to the United States have dropped 20 percent in the last year.
“We have had to cut back on our own orders to our local suppliers of zippers, nylon and polyester,” said Jim Jiang, the company’s sales manager.
Demand is beginning to weaken for big-ticket purchases. J. D. Power and Associates just cut its forecast for car sales in China this year to 5.95 million — still up from 5.42 million last year, but much less of an increase than the company’s previous forecast of 6.2 million.
More serious for the broader Chinese economy are signs that the real estate market is weakening after years of climbing prices that had prompted warnings of a possible bubble. Here again, the biggest trouble seems to be in southern China.
Min Hwa, a real estate broker in Shenzhen, a city of at least 12 million people near Hong Kong, said that residential real estate prices dropped by 10 percent over the last year in desirable neighborhoods near the city center and nosedived by up to 40 percent in outlying neighborhoods.
“We have seen a lot fewer prospective buyers in recent months,” he said.
Northern China tends to produce a higher proportion of industrial goods and fewer consumer goods than southern China, and seems to be faring better. Exports are still rising, for example, from the port of Tianjin, near Beijing.
But there, a few provinces like Shandong and Shanxi are suffering from power shortages. The shortages are forcing factories to limit their operating hours because not enough coal is being mined to fuel some of the many new power plants that opened in the last two years.
Andy Rothman, a China economist at CLSA, a Hong Kong brokerage, said that nearly half of China’s provinces had scattered power shortages this summer. But the slowing of the economy will prevent the problem from becoming widespread before cooler weather brings an end to air-conditioning season, he said.
The timing of the slowdown at the beginning of the Olympics appears to be largely coincidental.
Beijing accounts for slightly more than 1 percent of China’s people and less than 5 percent of its economic output. So even heavy spending in the Beijing area on Olympic sites is unlikely to have had much of an effect in lifting growth in the last months or in depressing growth now that the construction has ended.
But fears of a post-Olympic slowdown have become part of popular culture in China, and a subject of great interest among stock market investors. Chinese stocks have fallen by more than half after soaring to records in October.
The earthquake in May in Sichuan Province does not appear to have hurt the economy, and may even help economic output as towns in the area start rebuilding with heavy government spending.
More broadly, China’s enormous investments in new roads, ports, rail lines and other transportation networks are starting to show productivity gains that could help the country weather a global economic downturn better than most.
And foreign investment is still pouring into the country, increasingly directed at higher-technology industries, although other Asian countries are also drawing more investment.
Chris Woodward, the managing director for China at Ryder, the big logistics company particularly active in shipping auto parts, said American companies were still expanding in China and were becoming more focused on the market here even as Chinese exports slow.
“People have made huge investments in the infrastructure, and it’s not just the physical infrastructure,” he said. “It’s all the training and people development.”
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