Tuesday, December 2, 2008
China's Economy to Contract Next Year?
Most forecasters have said that China's growth will slow to 7 or 8% next year.
However, the guy "voted best regional economist in an Asiamoney magazine brokers' poll for 11 years", Jim Walker, now chief economist at Asianomics Ltd., "estimates China will grow zero to 4 percent next year, with a 30 percent chance of a contraction."
Walker's statement appears in a Bloomberg article entitled "China Property Slump Threatens Global Economy as Growth Slows".
Economists like Nouriel Roubini would consider a slowdown from the current figure of 9% growth (it was 12%) to 7% to constitute a "hard landing" of the Chinese economy.
4% or less would be very bad news indeed for the world economy, since a slowdown would severely impact commodities sellers such as Brazil, suppliers throughout Asia, and - one way or the other - the entire global economy.
Indeed, China's economic health is so important for the world economy that Paulson is starting to sound like Peter Schiff. Specifically, Paulson told China recently that it should focus more on domestic demand, instead of exporting to America.
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The average annual growth rate for China is about 10%, but due to the economical crisis, many of the private sector businesses were forced to close. Due to this problem, the public sector had to expand, and the growth rate is thought to lower to 7, 8 %.
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