Chinese economy facing another recession period, latest findings suggest

Latest statistics show that China’s economy is experiencing a hard landing. When the numbers were crunched earlier this month, the results were appalling as the month of October showed a massive downfall in the inflation rate and lack of demands on the retail
front.

The inflation rate had been wrongly aired at 16 percent last month however; the latest stats show that October saw a massive drop of inflation from 6.1 percent of September to 5.5 in October. In August it was 6.2.

The concerns from the Premier of China were obvious when he said that the inflation rate had fallen
considerably last month.

On the other hand, the import/export deficit is increasing exponentially, thanks-in-part to the deteriorating European economy. The demand in that part of the world has decreased extensively resulting in 15.9 % exports in the October, down from 17.1 in September.

Moreover, the Occupy Wall Street freak show is also showing its vitals on the Chinese economy as large conglomerates are hesitating in importing oriental goods.

Imports have increased to an alarming level in the past one month. Many raised the suspicion that Beijing industrialists are importing and stockpiling petroleum goods and copper on large scales.

However, this was a picture of international trade. The decrease in the inflation rate is also affecting the retail market. According to a report, the Chinese Association of Automobile Manufacturers issued recently, the demand in cars has decreased from
1,319,500 in September to 1,220,800 last month accumulating to a whopping 7.5 percent decrease in demand.

The aforementioned stats show a lack of interest from the local customers in both foreign as well as local brands.

The same situation happened in 2008 when global recession devoured every local economy but China was able to bail itself out by stimulus offerings from the Chinese government. However, the picture is entirely different this time around.

The government is on the verge of handing over the reins to the fifth generation. The process is scheduled to start next year when 18^th Party Congress presides and it will conclude later in August or September with the reconstitution
of Central Military Commission.

Keeping retrospective way of taking over the charge in mind, the economic reforms to be put in place will take until 2015 as the new government takes almost two years to get its bearing of the world’s most populated country.

It looks like the Chinese government is just buying time to pass on the aggravated economy to next generation more like what George W. Bush did in 2008 when Obama was elected the next president of the US.

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Posted by Usman Khalid on Nov 14 2011. Filed under Business. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry