This may be the million dollar question that everyone what to know the answer. Many friends and readers asked me about how will China perform in the next few years when the global financial crisis is spreading. It seems for sure that US will suffer from the recession in the next few years, and so do many other countires. What about China?
To be honest, I don’t know. I am confused myself.
The last time I have the feeling of confusing was during the SARS period: everyone is asking how serious SARS is, but even I am not sure whether I should believe in what is reported in TV (I was very sure that I should not believe, but if you don’t believe it, that is your source of reliable information?) However, just as the SARS period, although I cannot confirm the over situation, I am 100% sure of what I see from my own eyes. In this time, I hoep I continue to act as eyes and hears for people who are not able to be here by him/herself.
It seems to me the consuming in Shanghai is not impacted. Restaurants still have enough customers, and you have to wait in long line at almost everywhere at dinner time, especially on Fridays.
The shopping malls are still full of people, with long lines at check out area.
Real estate price seems to drop a little bit, but only on the newly built house side. For second house side, the price is there, but there is no volume. The price for second hand house are stuck in the middle. Recently, there are a bunch of aggressive controller method from the central government regarding real estate market, like lower down the tax, and lower the down payment requirements… It seems to me that the Chinese government has learnt from US experience, that if house market crashes, the whole economy suffers. If the previous 1-2 years, the government is busy pressing house price down, now they are working hard to keep the house price stable (not up, but definitely not down).
When my friends about whether people in China are optimistic about the future of economy or not, my answe was: “People are still very optimistic, since the media propogada is all good news”.
When you browse the headlines of major newspapers (if not all the newspaper), it all stated that “China is confident to keep high growth during the hard time for the world”, or “Impact to China will be small…”.
The other interesting news I got from one of my friends was, key financial magazines have been banned to reprint news from Financial Times, or Wall Street Journals.
When I talk with normal people around me, they are very optimistic, just as newspaper headlines can be. However, when I talk with industry expert, from economist, to fund managers, to government officials, they are not that optimistic. Some of them are “scared”. One of them said, I have been working in this field for so long time, but I have never been so scared.
My 2 Cents?
Me? Just as one blind man around the elephant, I have no idea about what it is going to be. Let’s wait and see…
i’m been following Michael Pettis and ChinaLawBlog these foreigner to form 80% of my idea of this so called financial thing
‘Michael Pettis’ ‘chinalawblog’
two not bad sites advised.
here is the question: how long will it take before someone from CHINA is obliged to tell someone from State A what’s happening from State B in the United States?
that’s happening here. i can’t ignore those two news sources.
As for the media and industry experts, it has been reported that many, if not all newspapers have been banned from interviewing some of the most pessimist economists and publishing their statements. In that context, I’d be really curious to know which domestic economists the Chinese follow. Who are the most pessimistic ones, who are the most optimistic ones, and who are the ones whose opinions and valued the most by the majority of Chinese?
At the English-speaking front, the above-mentioned Pettis is certainly a must-read. Brad Setser should also be mentioned though he doesn’t focus on China specifically. And I believe HSBC’s Stephen Green is also worth following.
I occasionally read Chinese news articles, and my humble view is that Andy Xie (谢国忠) and Ma Jun (马骏) come close to foreign economists in terms of pessimism. Is this impression right?
I’d recommand Michael Pettis’ blog too. But in my opinion, he should be on the pessimism side too. At least his pessimism on inflation control a few month ago proved overly pessimistic.
It looks like that China is just a bit too far from the epicenter of financial crisis :-)
We haven’t felt much even in California. There is still traffic during rush hours. The business of local restaurants seem to be OK as well. But I was told that the impact to NYC is indeed already quite obvious…
It is very similar as last time’s Asia finance crisis, ‘financial crisis, what is it?’ …
It’s is indisputable that with consumption a relatively small part of China’s economy relative to exports, that a drop in consumer confidence in the countries to which China exports will hurt the strength of the Chinese economy. So far, though, I’m glad I’m here and not New York or somewhere like that.
Also, given the effect of psychology on markets and the wild swings that have happened in the SH stock markets on the basis of rumors, perhaps the government’s censorship in the this case is not all bad.
The financial crisis affected everyone not just in US. We should all do our best to cope up with the crisis even in our own little ways.