Chinese economy in the thick of slump, catalyzed by the power transition next year – Part 2

Most US economists are spreading the word of imposing duties on Chinese imports in the country to help promote the local labour pool. However, their misled belief is not going to help the case in any regard. The Chinese have a better infrastructure, when
it comes to production, whereas the US has innovation, when it comes to new product development.

Both have to work hand-in-hand to solve the mercurial nature of the US economy and the falling-apart Chinese economy.

However, China has to come up with a plan of their own to overcome catastrophic situation that lies ahead in 2012.

It seems that Chinese Vice Premier Li Keqiang, who has been nominated ‘next of kin’ to the premiership, has been taking the situation into his stride. This is good sign in a sense and not as good as well, keeping Mr. Keqiang’s history in view.

It is good that the VP is keeping tabs on the current situation and is taking part in the decision-making process. He is chairing most of the meetings and is promptly speaking his views in process.

However, when it comes to outcomes of his decisions, he does not have a great track record. His policies in Henan and Liaoning provinces were complete failures and there is a fear in the international community that he might carry on his legacy in the new
position.

Moreover, both Keqiang and the current premier, Wen Jiabao, belong to different groups of politicians in the country. The Chinese government has had a great impact from the faction-driven political infrastructure in the country. The fact that both the premier
and his assistant belong to two different factions might spur conflict of interest in the process of decision-making.

Whatever might be the reasons, the government has to act fast because the power transition process in China takes more or less two years and by 2014, it might be too late for a new economic strategy.

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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