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There was once upon a time a concept such as "required economic growth".

  There was once upon a time a concept such as "required economic growth" to absorb employment-seekers, new entrants into labor market.  Assume some number for employment elasticity to economic growth for that.  It is a hunch for stability in the sense of political economy consideration.  Early summer I asked a friend of mine, who happens to be a China specialist: what is the magic number for China?  He pondered a little to say: 7%.  So, this news seems scary to me.

China's Economic Growth May Slump as Spending Comes Too Late

By Paul Panckhurst and Li Yanping

Nov. 8 (Bloomberg) -- China's economy may expand at the slowest pace in nearly two decades next year as demand for exports slumps in the U.S. and Europe and government spending fails to bridge the gap.

Gross domestic product may advance 7.5 percent or less, the weakest since 1990, according to estimates by Credit Suisse AG, UBS AG and Deutsche Bank AG. Royal Bank of Scotland Plc predicts the economy will grow 8 percent next year, while 5 percent ``can't be ruled out.''

China hasn't yet ramped up spending on railways, roads, and low-cost housing by enough to stop a slowing economy from cooling more, economists said. At stake is the contribution to global growth -- 27 percent last year -- that Premier Wen Jiabao says is the nation's way of helping the world through the financial crisis.

``The government's fiscal stimulus plan may not come in time to avert a deeper economic slowdown,'' said Ha Jiming, chief economist at China International Capital Corp in Beijing. Growth may be 7.3 percent next year, he said.

Indicators from auto sales to power consumption and export orders are pointing down and a slump in the property market is also threatening growth.

``I'm getting pretty worried,'' said Paul Cavey, an economist at Macquarie Securities Ltd. in Hong Kong. ``It really looks like things are slowing down quite sharply and there's nothing in the works that can turn it around in the next six months or so.''

Influence Beyond Shores

China has averaged 9.9 percent growth for the past 30 years and its expansion underpins demand for the exports of its Asian neighbors and commodities from iron ore to soybeans.

China contributed the most to global growth in 2007, the International Monetary Fund said in a report in April this year. It used purchasing power parity calculations, which account for differences in the exchange rates of national currencies.

Exports may cool to 18.1 percent in October from a year earlier, compared with 21.5 percent in September, according to a survey of 17 economists by Bloomberg News. The report is due next week.

``Exports could suddenly decelerate sharply as the global credit crunch restrains normal business and trade financing,'' said Wang Tao, an economist at UBS. ``Anemic export growth could seriously affect manufacturing investment.''

Unsold Cars

Manufacturing contracted by the most since at least 2004 last month and export orders dropped to their lowest, according to CLSA Asia Pacific Markets. Unsold new vehicles were at a four- year high in September.

``The golden years have shuddered to a dramatic halt,'' said Stephen Green, head of China research at Standard Chartered Bank Plc in Shanghai. Green is reviewing his 7.9 percent forecast for next year because a ``big fiscal policy package'' hasn't arrived.

The government ordered Finance Minister Xie Xuren to return home early this week from an economic conference in Peru to deal with economic problems, an organizer of the event said.

The government is poised to this year announce a switch to a ``proactive'' fiscal policy in 2009 to sustain growth, China Business News reported, citing unidentified government officials. The change may come after an economic planning meeting to be held this month or next.

Though the government has pledged to boost infrastructure spending and Chinese media reported this week that road building may get a boost of 2.9 trillion yuan ($425 billion) over three to five years, nothing concrete has been announced.

China has taken some steps to spur its expansion. It cut interest rates three times since September, eliminated quotas that restrict bank lending and cut export taxes. It's also stalled the yuan's gains against the dollar to keep exports competitive.

That's not enough, said Ma Jun, chief China economist at Deutsche Bank in Hong Kong.

``Without fiscal stimulus, China's GDP growth will likely decelerate to 6 percent next year,'' said Ma. ``The downside risks to economic growth are significantly greater now than just a few months ago.''

Though I'm not convinced, Calculated Risk has an interesting thoughts.  If so, internal demand-oriented growth could be an additional killer to the US.

【後記】2008年11月10日日経夕刊に、中国の積極的財政政策が報道された。これは中国の輸入を下支えするであろうから、輸出は落ちるが、輸入は落ちないかも。とすると、中国の貿易黒字は低下、他の条件を一定として、資本輸出が小さくなる。これは、米国の長期国債の金利に影響があるかも、、、。

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