Chinese economy in the thick of slump, catalyzed by the power transition next year – Part 1

China’s economy is sinking fast but the downturn is merely a problem created by them. However, according to some experts, that might not be entirely true. The second largest economy has taken some steps in the past that have been beneficial at times but
now they are becoming consequential.

At the latest gathering of all the stockholders in China, Central Economic Work Conference, staged in Beijing, the Communist Party leadership announced that it will be taking steps to rectify the situation before the next government takes control.

The Chinese leadership transition takes place once in a decade and unfortunately that time has come in a devastating situation. Most probably, the target of the current leadership is to sustain the economic condition in China so that the next group takes
it over and induces its own policies.

The Conference concluded the general meeting with a statement, which was quite reassuring, that emphasized more on stability than progress. According to the authorities, the word ‘stability’ means “to maintain basically steady macro-economic policy, relatively
fast economic growth, stable consumer prices and social stability.”

It is about time that the Chinese government should start considering a change in the direction of their economic policy. Chinese governments over the last three decades have been focusing on large outputs to cater to even larger exports demands. However,
the current global situation and Europe’s economic meltdown are not helping in this regard.

What the China power should have done five or six years ago was implement this very sustainability strategy to its macro-economy. However, what they did was concentrate on exports and production in that perspective.

Now, the very same economy giants are facing turmoil of their own when global economy is standing on Achilles ’ heel. The export demand has gone down exponentially in the last three calendar-year quarters following a downturn in the Europe. The US and the
European Union are the two biggest importers of Chinese goods. The EU is living through the miseries of its own right now and the US-China relationship is aching as well.

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Posted by Usman Khalid on Dec 19 2011. Filed under Business, Europe. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry