While Asia basked another week in generally favorable economic winds–minus that little 7% stock squall in Japan in Thursday, whatever that was about–there remained an undercurrent of worry about China.
A contraction in factory work there in May, at least if you can believe such early statistics, built upon ongoing concerns that the low-grade Chinese flu (commercial, not avian) of the past several months isn’t going away soon.
That’s been evident in most China equities for some time, and even some in the tech sector have begun to sport weakness. That’s significant because the Internet business there is domestic by government design, and therefore isn’t suffering because exports to Europe are weak.
Adding to this was a bleak report on job prospects for the country’s latest big crop of college graduates.
It isn’t because China is pursuing the dread “austerity” policies imputed to many European nations. In fact, the debt binge in China at various levels seems to be unchecked, a condition present in much of Asia, the Wall Street Journal took note on Friday (beware: paywall).
Of course, it should be observed that reputable development economists, such as those behind a new report touting prospects for U.S.-China trade, believe that debt across the whole Chinese economy is vastly manageable–which apparently doesn’t stop investors from being choosy about it, per the WSJ again.
Assuming Beijing officials indeed can manage various major transitions in the nation without financial upheaval or violent conflict, the question is likely to be what rate of growth will be tolerated during a shift toward more consumer-driven output, as opposed to the manic factory, infrastructure and property investment that was driving GDP up 9% and above annually not that long ago.
Would you believe 7% now, or maybe lower?
That’s a change in a lot of people’s plans. So far, however, the Politburo chiefs just installed appear content to keep the burners turned lower as they follow through on their initial economic reforms building to a Community Party Plenum this fall to sanctify the new regimen.
But that’s several crucial months away, and in the meantime Asia and the rest of the world can only stay distracted by Japan’s sudden strut so long. China will continually bear watching.
forbes.com
A contraction in factory work there in May, at least if you can believe such early statistics, built upon ongoing concerns that the low-grade Chinese flu (commercial, not avian) of the past several months isn’t going away soon.
That’s been evident in most China equities for some time, and even some in the tech sector have begun to sport weakness. That’s significant because the Internet business there is domestic by government design, and therefore isn’t suffering because exports to Europe are weak.
Adding to this was a bleak report on job prospects for the country’s latest big crop of college graduates.
It isn’t because China is pursuing the dread “austerity” policies imputed to many European nations. In fact, the debt binge in China at various levels seems to be unchecked, a condition present in much of Asia, the Wall Street Journal took note on Friday (beware: paywall).
Of course, it should be observed that reputable development economists, such as those behind a new report touting prospects for U.S.-China trade, believe that debt across the whole Chinese economy is vastly manageable–which apparently doesn’t stop investors from being choosy about it, per the WSJ again.
Assuming Beijing officials indeed can manage various major transitions in the nation without financial upheaval or violent conflict, the question is likely to be what rate of growth will be tolerated during a shift toward more consumer-driven output, as opposed to the manic factory, infrastructure and property investment that was driving GDP up 9% and above annually not that long ago.
Would you believe 7% now, or maybe lower?
That’s a change in a lot of people’s plans. So far, however, the Politburo chiefs just installed appear content to keep the burners turned lower as they follow through on their initial economic reforms building to a Community Party Plenum this fall to sanctify the new regimen.
But that’s several crucial months away, and in the meantime Asia and the rest of the world can only stay distracted by Japan’s sudden strut so long. China will continually bear watching.
forbes.com
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