Chinese economy in the thick of recession but government stays unmoved – Part 1

The Chinese economy is tumbling down but Chinese leadership seems to ignore the fact and along with the leadership is Justin Yifu Lin, chief economist for the World Bank, who supports the ideology that the economy will continue to grow.

In the latest statement, the chief said: “China has the potential to achieve another 20 years of 8% growth.”

However, economists all over the world opposing these statements and the figures over the last three years support their premise that the Chinese economy is in a free fall like the US faced in 2008. Two years back, the Chinese economy was showing a growth
of almost 9 percent on yearly basis but last year it fell to 5.5 percent and it is expect that next year  the country might face a deficit in exports as compared to the gross domestic product (GDP).

China has been one of biggest exporters of domestic products over the last one decades, giving a hard time to the US exports, which are elegant but expensive at the same time. On the other hand, the Chinese products have been the cheapest in the market and
therefore affordable, hence a global dominance.

However, the current turmoil in the Europe and the still-aching US economy has seen little imports from their counterpart in the east side of Asia. The exports have dropped down exponentially and have inflicted a huge damage on the Chinese economy. The one
thing that the Chinese leadership has managed to ignore so profoundly is the encouragement of domestic consumption.

Justin Lin seems to ignore the fact that the international economy has not come out of the 2008 global recession and the European Sovereign Debt crisis is not a helping hand in the cause to increase the exports. Nobody needs to be a super expert at knowing
the facts and figures that are haunting the Chinese leadership. However, they are as stubborn as a stone in changing their policies in increasing the domestic consumption.

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Posted by Usman Khalid on Dec 26 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