China Crisis Watch (10)

Getty Images via DaylifeAt first glance, China's economy seems to suffer from problems that seem directly related to the global financial crisis. Its real estate is suffering from a downturn. Car sales have dropped. Export is dropping and many of its export-oriented factories have already closed their doors or are at the verge of doing so, triggering off massive social unrest.
The problem with first glances is that they are often wrong. Many of the current economic changes - even the word 'problem' might be misguided - are not the products of failing market systems, but deliberate government policies, with the exception of the stock exchanges, who were going south already since the beginning of this year. Actually, most were policies aiming for a slowdown of the overheated economy that for a long time did not work out as the central government wanted it.
Well, now they are working out and that might be partly caused by the economic crisis, because they started much earlier than the global crisis and are introduced by the central government, they have a very different character than the problems the rest of the world is suffering from.
Car sales are down, because after long delays the government has started to increase fuel prices and is making it more expensive to buy cars. Potential car owners might just wait till those policies change again, as the oil prices has already dropped and some panic in Beijing might cause a reversal of those policies.
The slowing down of the sales in real estate are part of other policies by the central government, policies that would - to the pleasure of local power brokers - jump start China's most profitable industry again, the construction industry.
Export might be a tougher case, and more related to the globally expected recession. But unlike many European, Chinese do not watch the developments in the US that closely. Since their markets - with the exception of the export - are having their own dynamics, economic change might have a much different character in China. It might be equally brutal - closing factories are nowhere in the world a nice view. But the differences with the rest of the world might still be larger than the similarities.

Links
Financial Times: How the financial crisis is changing China
China Financial Market: CITIC and risk management practices
Healthy growth retails defies crisis trend - Paul French
Reuters: China to pump $19 bln into rural lender AgBank
Time: How Will China Weather the Financial Storm?
New York Times: China, an Engine of Growth, Faces a Global Slump
Pomfret's China: China's Economy: Crash Landing?
The Economic Observer: Incentives to Boost Ailing Real Estate
The Economic Observer: China's Real Estate: To Pop or to Prop

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Making sense out of China's economic development is the daily work of our leading economic experts at the China Speakers Bureau. Are you lost? Get in touch with us to get backgrounds from China's opinion leaders.Warren Liu
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