Home > Uncategorized > Sock City’s Decline Reveals An Unraveling In China’s Economy – Business Insider

Sock City’s Decline Reveals An Unraveling In China’s Economy – Business Insider

September 9, 2012 Leave a comment Go to comments

Recruiters in those provinces had previously complained of severe labour shortages, he points out, and opportunities in migrants’ home provinces have improved: “Recently it was reported that, for the first time, there were more rural labourers from Sichuan working within the province than outside it.”

Beijing’s push to develop inland areas has also had some success, as Crothall points out: while Zhejiang’s economy grew 5.2% in the first half of 2012, down from 12.1% in the same period last year, western areas like Sichuan, Chongqing, Shaanxi and Guizhou all saw rates of above 16%, according to official figures.

But growth is now slowing in those regions, too – and because their economies are so much smaller, they have less effect on the overall situation. “You would have to triple Xinjiang’s economy to have an impact on the national picture … If you can’t fix Guangdong, you can’t fix China,” says Thornton.

Yet, says Patrick Chovanec of Tsinghua University’s School of Economics and Management, the outlook is not uniformly negative: “This is an economic adjustment and, in the long run, will be good for China and the world, but it doesn’t mean it won’t be painful.”

Officials and analysts have long warned that the Chinese economy is unsustainable; that the years of double-digit growth were fuelled by investment and exports, and that rebalancing and reform were desperately needed.

A powerful editorial in Caixin, the country’s most influential business magazine, raised fears that local governments were ignoring the centre’s cautious approach and instead attempting another major stimulus that would crowd out smaller private enterprises, deter competition and increase distortions in the system.

Continuing to pursue high-speed growth, fuelled by government investment, will mean that “growth will fall; discrimination will become pervasive, and rent-seeking and corruption rampant; our society and environment will be pushed to their limits; and development cannot be sustained. The mass protests, riots and environmental disasters we have seen are just some of the consequences of this distorting growth model. They are a warning,” it said.

“If we continue to hanker for economic ‘miracles’, we must be prepared to pay a high price in future.”

via Sock City’s Decline Reveals An Unraveling In China’s Economy – Business Insider.

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