Monday, October 20, 2008

The Deep Chill

Today the National Bureau of Statistics had a press conference releasing its latest figures on the Chinese economy.

And they don't look so good.

Bureau spokesman Li Xiaochao said China's economy grew 9.9 percent year-on-year in the first three quarters, but in the third quarter, the gross domestic product (GDP) growth rate was just 9 percent, the lowest in five years.

Many economists had projected it would be between 9.1 to 9.5 percent.

It seems China is on the edge of an economic slowdown.

There are now reports coming out of the Pearl River Delta region that half the toy companies there are closing up shop, with the increase labour costs and fewer orders from Western countries like the United States, causing already paper-thin profit margins to disappear into thin air.

Meanwhile, thousands of migrant workers are jobless and not much work to be found.

Some have reported they will have go go back home; others out of pride say they still owe friends and family back home money and don't want to return penniless.

However, other factories are hiring which is good, but probably not taking everyone.

The government has also cut interest rates and scrapped taxes on interest accrued from deposits in a bid for its people to consume more.

But with most of the people still stuck in a saving mentality -- which is good in times like these -- it may be hard to get them to part with their hard-earned money.

After people were burned in the stock market, they may turn to property, but even that sector is practically in deep freeze, as many potential home buyers are waiting for prices to drop even further.

Perhaps the market will adjust itself and eventually when the price is right, the economy will move again.

But may this be a lesson to property developers and others looking to make a quick buck -- the Chinese aren't going to be fooled again and dirty tricks have wised-up these weary consumers. Give them the good deal they deserve.

1 comment:

ks said...

china is still the best of the worst lot. chinese people are very resilient. they can take hardships with courage. americans are used to lavish life style they will suffer more.