Tuesday, February 3, 2009

China's Economic Malaise

Wow, what a drastic turn of events.

Just last summer, prominent economists were saying that it is quite plausible that China's economy would decouple from that of the U.S. and Europe, thereby not simply surviving the global financial crisis, but walking away unscathed.

What a different six months make.

In fact, what a difference a day makes.

Reading the comments of Chinese Prime Minister Wen Jiabao (caricatured) in a special Financial Times interview yesterday, he emphasized economic growth, noting that some 12 million Chinese have returned back to their rustic life, having recently been made redundant.

Well, today's issue of the Financial Times notes that the newest figures from Beijing, released yesterday, portend a much gloomier picture: some 20 million have lost their jobs, and more jobs are likely to be shed in future months.

Quite understandably, Beijing is wary of public dissatisfaction, especially from its millions of restive, young graduates who may have problems finding jobs this year. China's giant stimulus package will try to counter their unhappiness, but will it be enough?

Time will tell, but it doesn't seem that time is on China's side, at least not at the moment. By having to achieve annual growth of at least 8 percent this year so that enough jobs are kept or created for its expanding population, China faces a tough road ahead.

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