China’s Premier Wen Jiabao, a truly inspiring public leader, said in a statement this week that the world’s fastest growing economy is now in “good shape” “featuring fast growth, gradual structural improvement, rising employment and basic price stability” and this statement said at the World Economic Summer Forum in Tianjin, can be seen as a positive sign that boosts the general investors confidence that the nation will avoid a sharp slowdown. He added that China’s growth will drive a global economic recovery, and Wen’s appraisal came to validate his saying of June 30th this year that China’s economy was headed in the right direction. Growth in the second quarter slowed to 10.3 percent from 11.9 percent in the first three months of the year after the government increased requirements for mortgages and halted loans for third homes to rein in gains in home prices.
The government will continue measures to curb property speculation and work to maintain stable home prices, Wen said yesterday. China will also push forward its energy-saving and environmental protection efforts and accelerate reform of income distribution in the nation, he said. Industrial production rose 13.9 percent in August from a year before, the most in three months, and retail sales and lending figures exceeded economists’ estimates, statistics bureau and central bank data released Sept. 11 in Beijing showed. Imports also accelerated, another sign Chinese growth is picking up after a second-quarter moderation that came as the country took measures to cool the property market. Inflation in China is 1.25 percentage points above the benchmark one-year deposit rate, the latest data showed. So- called negative real interest rates often encourage savers to shift money into assets such as real-estate, sparking the risk of bubbles.
China’s economy has grown more than 90-fold since the late leader Deng Xiaoping initiated economic reforms more than 30 years ago, inviting in foreign companies such as Volkswagen AG and American International Group Inc. to help modernize the country. China’s gross-domestic product surpassed Japan’s in the second quarter and was second only to the United States. Wen pledged during this week’s forum, to create an open and fair business environment for foreign companies in the nation, saying all products manufactured in China will be treated equally in government procurement. (Bloomberg)
What we need to understand is that the developments and progress we have experienced in the Chinese Sconomy was carefully planned by China for a few decades, because they have been moving towards the state controlled capitalism and slowly replacing communism with socialism. One serious issue of concern though is that China still can’t offer to the outside investor willing to invest towards China any guarantee of no government intervention. That means that China will continue for the near future to move towards exporting goods rather than becoming an invested nation. And on this motive, China as a nation has always believed in working in a very autonomous way. They don’t really allow or let outsiders copy what they have but they copy almost every good quality product of any country & keep the quality of the end product somewhat “poor”, which makes it attractive to consumers mainly because of its low cost. Top this up with their ability to produce anything on a large scale that reduces further Chinese produced per unit cost. As Deng Xiaoping said, "No matter if it is a white cat or a black cat; as long as it can catch mice, it is a good cat."
NCSC - Extract from week 37 dry bulk report
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