Author: kodama

China heading for recession? [Copy link] 中文

Post time 2008-11-23 12:46:53 |Display all floors
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Post time 2008-11-23 13:04:13 |Display all floors
West,

The problems with your analysis are simple.

Bank credit, not consumer credit, is frozen. Consumers still have access to credit to make purchases and this credit pool is actually expanding because more stores are starting to issue credit again--many stores quit doing so starting the 1970s and 1980s when credit cards became pervasive--and on easy terms because retailers need to move product, even if it means eating margins left and right. Home loans are actually quite robust.

The problem is two-fold: consumers know that the economy has been shedding jobs, they know that prices will have to fall, they know that their jobs may not be secure. So people are holding off on many purchases until they feel more secure.

Next, China's "stimulus package" isn't what it appears to be. Much of what is in there is spending already planned and long since factored in to China's earlier projected growth rates. It's unlikely to stimulate the economy since earlier, now reduced, projections already factored it in.
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Post time 2008-11-23 13:11:44 |Display all floors
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Post time 2008-11-23 19:31:05 |Display all floors
So China sells stuff to the US and the US gives China money. Cool. Then China sells more stuff to the US and they so ok we'll buy that too it's cheap. Here's some more money. The the US says ok out of money now, we can't buy any more stuff.

Who's fault is the crisis?

Yes I know this is over simplified however....

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Post time 2008-11-23 23:02:48 |Display all floors

China's unemployment level 'critical'

By China Correspondent Stephen McDonell

Posted Thu Nov 20, 2008 10:14pm AEDT
Updated Fri Nov 21, 2008 12:24am AEDT

China's unemployment situation is critical according to a key Government mini ster.

The Chinese Government has warned that the country is facing a massive problem with unemployment.

Social Security Min ister Y i n  W e i m i n described the unemployment situation as "critical" and said that the impact of the world economic crisis is still unfolding there.

The hardest hit area was the coastal manufacturing strip in the south-east where textile and light industry companies are going under.

Mr Yin said the Government would provide financial aid to some manufacturing companies to try and reduce the problem.

Offici ally China's unemployment rate is 4 per cent but it is thought to be a large underestimation because it does not account for 100's of millions of rural workers.

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Post time 2008-11-24 06:37:06 |Display all floors
recession? hardly



REAL GDP

% Change YoY                      2006                 2007                   2008f                   2009f                   2010f

USA                                            2.8                   2.0                       1.3                       - 0.7                         3.0
Japan                                         2.4                   2.1                       0.6                       - 0.3                         1.3

CHINA                                      11.6                  11.9                     9.5                          8.0                        8.5

Europe                                       3.0                    2.6                      1.0                        -0.9                        1.0

WORLD                                     5.1                    4.9                       3.7                        2.5                         4.3

(National sources, ABN Amro estimates)

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Post time 2008-11-24 11:09:02 |Display all floors
Mark,

Depends on how you define recessions. All the current recession definitions apply to developed countries where expansion to meet population growth is also less than or equal to population growth.

It's actually quite rare for a developing country to fall into negative growth without non-economic factors, like war. But you certainly see recessionary effects when growth falls.

[ Last edited by interesting at 2008-11-24 11:46 AM ]
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