Ghost Factory sign of China's Economy Slump

http://news.bbc.co.uk/2/hi/business/7921786.stm

Some believe China's wealth may be key to resuscitating the global economy
Wen Jiabao's visit to the UK is part of something his government is calling a 'Journey of Confidence' - a whirlwind tour of Europe to promote trade and investment.
Speaking at the World Economic Forum in Davos, Mr Wen talked up China's role in reviving international fortunes: "We are full of confidence. The harsh winter will be gone and spring is around the corner."

Over the past two decades, China has transformed itself from a drab Communist state to the planet's third largest economy, with 1.3 billion consumers hungry for the fruits of capitalism.
But while people and governments in the West are burdened with debt, the Chinese are careful savers. Chinese households have one of the highest savings rates in the world - 30%, compared to about 1% in Britain, and close to zero in the US.

That is why some people think if the Chinese can now be coaxed into spending their hoarded wealth, they will be key to resuscitating the global economy.For his part, Mr Brown has made it clear he wants to do business with the Chinese leader while he is in town.

And both men agree the world must stave off protectionist trade policies and defend globalisation in the midst of the crisis.

China is set to spend a £400bn government stimulus package, most of which will go into building new infrastructure like roads and airports.

During Mr Wen's stop in Berlin earlier this week, two German companies inked deals with China in the transportation sector.

Mr Brown will be hoping that British companies can also get a piece of China's stimulus pie.
But there are others who see China in a different light: as the cause of the financial crisis.
China's two decade-long boom has been fuelled by exports - as the country transformed itself into the world's manufacturing hub.

China's foreign exchange reserves now total nearly US$2 trillion.It has used much of that money to buy American debt - mainly Treasury bills issued by the US government. There are some who argue China's effective line of credit to the American economy was the cause of the mortgage bubble - and therefore the credit crunch.America's new Treasury Secretary Timothy Geithner accused China of "manipulating its currency" - that is, unfairly depressing the value of the yuan so as to promote exports, thereby creating an ever bigger imbalance in trade.
In Germany, the Chinese Premier defended his country's exchange rate policy, telling reporters: "China is not to blame for this." It is better to believe that there is some sort of conspiracy in Beijing... All that is economic gobbledygook.

There are many experts who disagree with Mr Geithner."It is better to believe that there is some sort of conspiracy in Beijing to make Chinese manufacturers and exports wildly and unfairly competitive and put the poor American worker out of business," said Professor Willem Buiter, of the London School of Economics

But if the new US administration is unfairly using China as a scapegoat, it is still unclear how it can save the world from the financial crisis. The country has its own money worries - slowing economic growth, a slump in exports and rising unemployment. As exports fall, Mr Wen and his government are trying to replace it with domestic consumption - getting people and companies to spend. But that will not be easy in the face of China's woefully inadequate social security and public healthcare and with many of its citizens still living in grinding poverty.

To date, more than 20 million rural migrants in China were now out of work, is an indication that the slowdown in the world's third-largest economy was intensifying! I reiterate, more than 20 million!!! Large numbers of Chinese workers have lost their jobs as demand in North America and Europe for the cheap consumer goods made in China has fallen off sharply, forcing thousands of factories to shut their doors. An average of six million to seven million people leave their rural homes every year to find jobs, on top of the 20 million jobless, senior rural planning official Chen Xiwen said. The government said on Sunday that 2009 could be the "toughest year" since the turn of the century for development of the countryside, which has fallen behind as Chinese economic reforms have favoured the cities. In an interview with the Financial Times, Premier Wen said "new, timely and decisive measures" could be needed to spur the overall economy in China, less than three months after unveiling a US$580 billion stimulus plan. "We must take forceful steps. Under special circumstances, necessary and extraordinary measures are required," he told the paper. Wen, who took aim at the US economic policy in Davos last week, also said it was "ridiculous" to suggest, as some economists have done, that China's vast pool of domestic savings was to blame for the current global crisis. "Running our own affairs well is our biggest contribution to mankind," said Wen, underlining the goal to maintain growth at around 8 per cent, the minimum level Chinese authorities believe is needed to avoid social unrest. Taiwan, a major electronics exporter also hit hard by the slowdown, meanwhile announced a US$21 billion stimulus drive over the next four years, hoping to create 150,000 jobs and bring unemployment under 4.5 per cent. The jobless rate on the island was 5.03 per cent in December, the highest level in more than five years.

Further, about 220,000 stores may close this year in America, says a retail consultant Howard Davidowitz of Davidowitz & Associates. As more Americans save and spend less, it's clear there's too much retail space. Just visit Web site deadmalls.com and track retail's growing body count. And luxury retailers? They're on "life support," Davidowitz says. Hence, be prepared for mass retails closings not only in America BUT worldwide!


Some ignorant, foolishly naive government, businessman, investors, Finance Minister, Country's Leader across the globe earlier thought that they could look forward to China and India or maybe Europe for their economic growth after U.S. economic slumps. Some act like a novice though they had been in business for some donkey years. Well, it is now evidently crystallized clear that China, India & even Europe has got problems with their own domestic growth and many has fell into unprecedented negative economic growth! There are reliable evidence which suggests that Europe has got even bigger financial crisis catasrophe than U.S.

Well, let's look from another angle (perspective) whereby there is negative or slower economic growth. Definitely, it will be good for our environmental preservation and enhance the quality of our environment as there will be less carbon dioxide emitted by factories, cars, airplane, construction equipments when there is not much activity going on. Hence, global warming will be curb and reduced to some extent! That's why it's hard to strike a balance between economic growth and environmental preservation! If you choose one, you have to forsake the other. These two can never go together!