The good people in China’s ruling Communist party would like to assure everyone that everything is perfectly fine with their economy, thank you very much. They’d also like you to know that they have a deep and abiding respect for human rights; they share your concerns about the atrocities in Darfur, and all that stuff about Tibet is just a misunderstanding. But all that can wait. There are scurrilous rumours about that China’s vaunted economic awakening is coming off the rails, and Beijing is determined to stamp them out.
Under the headline “China’s economy has ability to recover from slowdown,” the state-owned news agency last week rounded up experts from such renowned institutions as the Center for Strategic and International Studies of Indonesia and the Vietnam Cooperative Alliance to express their undiminished confidence in China’s continued prosperity. It was an unfailingly upbeat assessment of China’s latest economic data: “Nothing to see here. Please move along.”
It’s another recent article that’s garnering more attention of late, however. This one appeared in the Far Eastern Economic Review, titled “The Great Crash of China.” In it, Brian Klein of the Council on Foreign Relations takes readers on a whirlwind tour through China’s emptying manufacturing districts, its plunging stock markets (the Shanghai index is down 67 per cent since January), and the rising anxiety among suddenly unemployed consumers. “Guangdong province alone, the heart of China’s low-cost manufacturing base, has seen half of the shoe manufacturing industry close shop (over 2,200 factories) this year,” Klein reported.
As it turns out, that’s not even the hardest-hit industry. According to recent report in Singapore’s Straits Times, more than 67,000 small and mid-sized companies have gone out of business in the first nine months of this year, including over half of China’s 7,000-plus toy makers. GDP growth has slowed for five consecutive quarters, and the economy is now expanding at its slowest pace since the 2003 SARS crisis. Official estimates (which tend to present the most optimistic view of the situation) now peg the annual growth rate at nine per cent, which sounds huge until you consider that the economy grew 12 per cent last year, and must grow by at least eight per cent in order to provide enough new jobs to China’s burgeoning class of young urbanites pouring into the job market each month. Unemployment is edging higher, and industrial output has slowed to a six-year low.
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