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Shocked to the proverbial bone Bloomberg reported that "China's economy,cheap jerseys usa, the biggest contributor to global growth, expanded at the slowest pace in five years as the financial crisis cut demand for exports. Gross domestic product rose 9 percent in the third quarter from a year earlier."
Economy got SARS?
To put it in a perspective anybody can relate to, Bloomberg said that "China's expansion was the weakest since the severe acute respiratory syndrome, or SARS, epidemic slashed growth in the second quarter of 2003."
This brings back scary memories of China coming to a grinding halt for months, while everybody had to stay home and was allowed to go to the shop once a week only. Soldiers in HAZMAT gear watched the lines. A cough, a fever, and it was off to the camps. That's how bad it is, Bloomberg wants us to think. While in reality, Mayor Bloomberg's city currently might be worse off than Beijing.
Only 9% growth?
Politicians and business people all over the world would sell their first born for 9% growth. I take that back. A 9% rise of GDP would make the rest of the world scared that central bankers will raise interest rates to ward off inflation.
Only 9% growth? China simply goes from an unsustainable, unhealthy and inflationary double digit growth to a healthier level.
Sure, export growth in China slowed substantially. It had to. Since the second half of 2007, the Chinese government tried everything to push down exports to a more sustainable level.
However:
- Retail sales in China rose 23.2 percent in September from a year earlier, matching the gain in August and close to the fastest pace in at least nine years.
- Urban disposable incomes for the first nine months of 2008 rose 14.7 percent from a year earlier. Rural cash incomes climbed 19.6 percent. People have more money and spend it.
- The formerly skyrocketing Chinese light vehicle market (which includes passenger vehicle and light commercial vehicle segments) is expected to slow in 2008, but it still will grow at a very nice pace. J.D. Power expects Chinese sales to come in at 8.9 million units in 2008, which would be an increase of 9.7 % compared to 2007.
- Much of the decline in exports started long before the U.S. meltdown. The decline was triggered by the appreciation of the RMB, which was actually a reflection of the rapid depreciation of the USD which took place until July 2008. A falling Dollar makes Chinese goods more expensive. As gasgoo.com said, "for most local auto parts makers, the impact on exports brought by the demand slowdown of the global market triggered by the financial crisis will be less than that of the RMB appreciation." It's just that nobody took notice.
The stock market knew it long before.
The Chinese stock market crashed from 6000 at the start of 2008 to around 2000 now,www.wholesalejerseyfactory.com, > without causing worldwide hysteria. Since January, the Chinese stock market lost more than 60%. Did anybody come to the government for a bail-out?
The Dollar rises. The Yuan barely moves.
In case you have been looking, the USD took a sharp turn and appreciated dramatically since July. This should be reflected in the USD/CNY currency pair, shouldn't it? Until July, the Yuan pretty much appreciated against the USD as the Euro did. The Dollar went down, the Euro and the Yuan went up.
What happened when the USD started rising like mad, starting in July? The USD/CNY rate barely budged. The EUR/CNY rate did move.
Bloomberg said that the Chinese "central bank has stalled gains by the Yuan against the Dollar since mid-July, protecting jobs in export industries."
Not true. The chart says they did just the opposite. The Yuan should have gone down sharply against the USD along with the other currencies. However, the Yuan barely moved.
The chart says that the Chinese central bank most likely propped up the Yuan against the US Dollar. China also took other measures to slow down their overheating export machine.
Yuan due for a fall.
Expect the USD/CNY come unglued within the next months,cheap jerseys, latest after the U.S. elections. We expect the Yuan to drop against the USD. This would be the easiest way for the Chinese government to make Chinese exports more attractive. In previous times, this would have been a rather unpopular move. But now, the world is focussed on other problems than watching the CNY/USD exchange rate.
Ultimately, the USD should drop as America cranks up the presses to print money to finance two wars and countless bailout. At this point, the Chinese can keep the USD/CNY level, and make their goods even cheaper in Euro terms.
More measures possible:
The tax measures designed to dampen exports will most likely be lifted. Sinking commodity prices and record-low transport prices make low wage countries like China even more competitive.
Like it or not, China is the country that keeps the world economy alive. The Chinese have the incentive and financial wherewithal to keep it that way. They have nearly unlimited room to grow,authentic nfl jerseys, while Western markets are saturated, and while especially European and Japanese demographics indicate shrinking markets. Out of this recession, China will emerge stronger than ever.

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