Everyone says China’s economy is recovering but facts tell a different story
Since the summer, exports have picked up again and economic growth is on the mend following the government’s 4 trillion yuan (6 billion) injection. Yesterday the Asian Development Bank (ADB) raised its forecast for China’s economic growth this year to 8.2 per cent, expecting an even stronger rate next year.
The situation is such that labour shortages have been signalled in some regions. In Shenzhen, labour authorities said companies were short of 120,000 workers or more.
Central China Television on Monday reported on labour shortages in several coastal areas, home to export-oriented factories. Zhejiang, for example, was short by 250,000 workers, the report said.
However, local sources and observers who spoke with the South China Morning Post were not so sanguine about labour shortages.
“Yes, many factories here are hiring workers. But actually it is kind of an after-effect of the mass lay-offs of late last year and early this year," said Chai Kwong-wah, president of the Hong Kong Small and Medium Enterprises General Association. New “orders are just seasonal and short-term for Christmas,” he said. Exports might crash again afterwards.
Dr Liu Zhenjie, of the Henan Academy of Social Sciences, said labour shortages were also the result of wariness among migrant workers and rising costs of living in industrial hubs. Many migrants from central and western provinces can now get jobs nearer their hometowns in central and western China, which is booming with government-run infrastructure projects.
Never the less, for Robert Wihtol, the ADB’s Beijing-based country director, “There is a limit to public investment and monetary expansion,” he said. China’s unemployed migrant workers may still fall into poverty because they are often excluded from social welfare programmes.
Local sources told AsiaNews that consumer prices are rising fast, despite official claims that inflation should decline 0.5 per cent this year. A drop of only 0.5 per cent runs against other official figures that say that consumer prices fell for the past seven months.
In any event, all experts agree that inflation will rise in China, independent of economic growth because of the current financial policies and large scale, often indiscriminate lending, which time and again takes the path of speculative investments.
“Hot money appears to be back,” said Yolanda Fernandez Lommen, ADB’s Beijing-based chief China economist. “It’s a natural development because we are seeing interest rates in the major markets very close to zero and in China interest rates are above 5 percent.”
Developing nations can accept inflation of more than 2 per cent, Chinese central bank Governor Zhou Xiaochuan said, but failed to explain what an acceptable rate is or make any predictions.
Official sources said that in the upcoming G20 summit in Pittsburgh, China is likely to claim the leading role in pulling the world economy out if its current slump, which is still gripping the United State and Europe.
Today Governor Zhou said that his country, thanks to its economic recovery, should have a greater say in the international financial system, and act as the voice of emerging economies. This means giving the mainland more influence in the International Monetary Fund.
Reflecting this shift in power, Washington has proposed a 5 per cent transfer in voting power at the IMF from developed countries to the more “dynamic” emerging economies, which are however seeking a 7 per cent shift.
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23/04/2010
