China's Growing Pains: Current & Future

[Adam's Apple]

Nice article with pretty good look inside China, analyzing problems it will face in the future. Probably need to print it out to read as it is long.

A Giant's Growing Pains
By Mortimer B. Zuckerman, U.S. News & World Report
1/23/06

Here's a piquant illustration of how China is emerging as a global economic and military superpower. The College Board asked a group of American high schools across the country to consider adding Advanced Placement courses in Russian, Japanese, Italian, and Chinese. Ten times the number of schools opted for Chinese over the other three languages.

The perception of China's rise is sound. In the past two decades, its economy has been growing at 9 percent a year, propelled in part by low-end, labor-intensive manufacturing sustained by an explosive consumer market. China is now also a force in commodity markets, especially energy. The achievement is not one of communism. It can be traced to China's determined shedding of the corset of a planned, top-down socialism in favor of a more market-driven economy that has released the energy and talent of hardworking people. Today, the technical and managerial skills of the Chinese are becoming as relevant as their cheap labor. Indeed, China is graduating so many engineers and sci-entists that they will accelerate its economic growth by throwing more brains at technical problems at a fraction of the cost in the West.

The Chinese economy is also distinguished by an appetite for investment. If you include foreign direct investments of $10 billion to $15 billion a month, the rate approaches 50 percent of gross domestic product--the highest ever achieved in a large economy and dramatically higher than the 30 percent peaks in Japan and South Korea. Again, more freedom is the trigger. Since it became a member of the World Trade Organization in 2001, China has lowered tariff barriers from 41 percent to below 6 percent today. It has the lowest tariffs of any large developed country.

For full article:
http://www.usnews.com/usnews/opinion/articles/060123/23edit.htm

 

[waltky]

Mebbe another slowdown in the global economy on the way...

Is China's economy slowing too fast?
March 9, 2011: Some economists and investors wonder if China's economy may slow down too quickly.

It's starting to look as if everybody's worst fears about China's economy may finally be coming true. China is slowing down. But how severe will the pullback be? And is it only temporary? That's up for debate. China reported sluggish auto sales figures for February on Wednesday morning. According to the China Association of Automobile Manufacturers, sales of passenger vehicles were up less than 3% from a year ago.

One reason for the slowdown is that tax breaks for small cars expired at the end of last year. But the anemic pace of growth may continue. Economists from Barclays Capital noted in a report Wednesday that "with borrowing costs rising and credit availability falling, the fuel for rising automobile demand is running low" throughout Asia. The economists added that weakness could be most pronounced in China and India since their central banks are raising rates to combat inflation.

If oil prices remain above $100 a barrel for an extended stretch, that could only make matters worse. And that may eventually be bad news for the likes of General Motors and Ford. (Their Chinese sales did rise in February though.) China's auto sales news comes only a few days after the Chinese government disclosed that it was targeting an economic growth rate of 7% a year for the next five years. That, of course, is still robust growth -- even if it is considerably lower than the double-digit percentage gains that China's economy has been growing at for the past few years.

"China is not immune to business cycles. But slowing the trajectory of growth is not the same as saying the economy is going to decline," said Art Steinmetz, chief investment officer at OppenheimerFunds Based in New York. Still, there is reason to be worried that China's economy may be cooling even more quickly than people expected.

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