China's economic downturn and the Lessons by Dr Sheo Nandan Pandey

aug 4th, 2010

china is cooling down. now what mischief will they hatch to divert attention? for instance, will they follow up on all that talk of the south china sea being a 'chinese lake', with some strong-arm tactics against vietnam (spratlys), the philippines (paracels) etc?

---------- Forwarded message ----------
From: Sanjeev 

Namaskar,

India must not rejoice if China's economic momentum's weakens. India needs to set its own benchmarks. If only GOI focused on increasing POWER supply then our GDP shall cross 10% sooner than expected. Strategically speaking China is a low cost producer of 2 key items - Power equipment (Only recently BHEL's monopoly is being broken) and Telecom equipment. Why can Indian cos not start producing telecom equipment.
Rgds sanjeev

China's Sliding Economic Momentum and the Lessons - Aug 2 2010

Guest Column by Dr. Sheo Nandan Pandey  http://www.southasiaanalysis.org/papers40/paper3961.html

(The views expressed by the author are his own)

Introduction

In the second quarter of 2010, China posted 10.3 percent growth in its gross domestic product (GDP) over the same period a year earlier.[i] This is against reported 11.9 percent growth in the first quarter of 2010. The slow down rate of 1.6 percent point marginally exceeds FactSet survey.[ii] Chinese Premier Wen Jiabao attributed the development to macroeconomic policy.[iii] It possibly included phasing out of the $586-billion stimulus spending, tightening curbs on lending and checking spiralling property prices.  

The glib in the argument of the Chinese Premier betrays his stand on the issue in the past, when he constantly called for arresting the slide down. It broadly speaks of the dilemma of the Chinese decision makers. The Chinese economy was presently beset with phenomenon of what has come to be known as 'yo yo depression'.[iv] It was an outcome of China's development model, and broadly held prospect of adversely affecting the momentum of global economy, albeit differently and diversely. The king pin of the destabilizing factors constitute the looming spectre of high inflation and high unemployment, largely an outcome of heavy and reckless public spending and lending that has led China to the precipice of bubbles in giant housing, infrastructure and manufacturing.[v]   

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