the-news.co‘s China correspondent, Michael Harris, spoke to our editorial team on Monday 12 November 2012
Is it true China is in recession?
‘It is not visible on the streets. It is a big country and only possible to see so much on each visit. The manufacturing base is in the Pearl River delta, an area in southern China up from Hong Kong, which makes everything from furniture to heavy industrial goods.
At present they are having problems with finding enough workers. Recently Government grants to farming communities helped increase agricultural wages, and factory workers from the cities went home for the Chinese New Year and didn’t return as they were able to get work closer to home enabling them to stay with their families.
Shortage of factory workers has led to higher salaries which in turn increased their manufacturing costs.
The Chinese currency, the yuan has strengthened over the last seven years by nearly 30% against the British pound. In 2006 a £1 bought 14 yuan, in 2012 it buys just under 10.
As a result of the world recession Europe isn’t buying as much from China as it used too and Chinese prices are rising. However whereas Europe is either experiencing zero or negative economic growth, China’s annual increase in GDP has only marginally slowed from 8% to 6.5% a year.
China has another big advantage of having an internal market of over 1.2 billion people to absorb any production that doesn’t go for export.
In the capital Beijing, and other first tier cities the authorities have restricted families to only buying one house, which has led to a number of couples to divorce in order for individuals to buy one each.
In the smaller second and third tier regional cities as these restrictions don’t apply the building boom has continued unabated and this accounts for reports of a glut of unsold properties in some areas with shortages in others.
The Communist government is trying to exercise tight control over their economy, and has just selected their new leadership for the next decade reducing the ruling Politburo from nine to seven members. There is growing popular dissent against corruption which has been compared with Africa because a number of China’s communist rulers have accumulated vast personal wealth.
21st century belongs to China
Just as Europe had it’s economic heyday in Victorian times and the USA in the second half of the 20th century China is the huge new industrial powerhouse on the world stage.”
the-news.co will be keeping update on what’s going on in China and more stories will follow…
