updated by Stormy
NEWS
600,000 Workers Leave Guangdong," Vice Governor Says
Air Pollution May Force Out 1 in 5 Hong Kongers
China Lists Websites That "Violate Public Morality"
http://www.bizchina-update.com/content/view/1790/2/
Fiscal Revenue Growth Drops in 2008
http://www.bizchina-update.com/content/view/1789/2/
Lenovo Cuts 2,500 Jobs
http://www.bizchina-update.com/content/view/1797/2/
Bank of America Offloads China Construction Shares
http://www.bizchina-update.com/content/view/1795/2/
WEEKLY NEWS BITES
Weekly News Bites 1: Google, Honda, GM, Deutsche Bank
http://www.bizchina-update.com/content/view/1809/2/
Weekly News Bites 2: Suning, Markor, Huawei, Alibaba, Lenovo
http://www.bizchina-update.com/content/view/1808/2/
Weekly News Bites 3: Semicon, FDI, Pollution, Oil, E-commerce, Steel
http://www.bizchina-update.com/content/view/1810/2/
CHINA STATISTICS
Weekly China Statistics Update
http://www.bizchina-update.com/content/view/1807/81 <-------
CURRENCY OVERVIEW
Currency Rates
http://www.bizchina-update.com/content/view/101/2/
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Biz China Update, Shanghai - Copyright 2009 Pride Star International Ltd
The news in recent days has been truly shocking. Nine million migrant workers out of jobs in coastal areas have returned to their home provinces, urban unemployment is actually about 9.4 per cent – or double the official figure according to the Chinese Academy of Social Sciences.
China’s Prime Minister Wen Jiabao, in a speech at the Beijing University of Aeronautics and Astronautics, singled out migrant workers and students as his biggest concern. One million students are out of a job, and 6.5 million more will graduate in about six months time.
Exports have decreased for the first time in seven years (-2.2 per cent). But, at the same time, imports have collapsed (-18 per cent) so that China’s November trade surplus (of USD 40 bn) is the highest of all time. This makes it impossible to depreciate the Chinese Yuan while remaining internationally responsible.
Even more shocking is the abruptness of the change. In October, exports were growing at a rate of 19 per cent year on year, while imports still increased over 15 per cent. It is as if someone had slammed on the trade breaks.
Deflation is Next
Exporters turning to the local market are cutting prices to compensate for the loss of their overseas business. Food and fuel prices are going down. With such news uncertainty is high and every company and everyone saves a bit more. The National Bureau of Statistics has announced it expects deflation (a negative consumer price index) by February, if not earlier.
If prices are going down, why not wait to buy more? This is the obvious decision that cost-conscious Chinese consumers will make, slowing down the economy further and pushing prices further down. Since the major part of China’s GDP (40 to 50 per cent according to various estimates) is due to domestic consumption, slower purchases by consumers are a big risk to maintaining reasonable growth.
Furthermore, the Chinese have stopped buying houses and all construction indicators have turned negative. With construction estimated to have generated one-third of 2007 growth, this prompted a Beijing economics professor to say "It's a show of patriotism to buy a house now." Still potential home buyers will wait until they feel housing prices are reasonable again: the professor’s call generated anger rather than patriotism across the internet chat rooms as citizens responded that developers have profited unduly from the previous price increases.
It is not an exaggeration to say that all of China’s growth engines are sputtering badly, reviving risks of social instability.
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