The need for inbound economic realism is simple. China’s realises (and actually knew this long in advance of the global recession) that its economy requires massive restructuring over the coming years. International demand for cheaply produced goods has fragmented, and – according to July’s export figures, which fell 23 per cent year on year – is continuing to do so.
In addition, Fu Ziying, China’s Vice Minister for Commerce, this week admitted that Chinese domestic consumption remains too weak to offset the slump in global demand. This admission zaps the ‘booster’ view that domestic consumption could seamlessly replace export volumes in the near future.
The domestic consumption replacement theory never was a realistic scenario at this stage of China’s growth, but the admission from a high-ranking government figure should be seen as positive as well as negative. A significant degree of economic candidness is now accompanying the slew of upbeat China statistics to which we have become accustomed. It’s all about economic realism, now.
The challenge for manufacturers is to study and address the opportunities, as well as the difficulties, that lie ahead. China’s economy is changing, and will continue to do so. And just because the figures are currently less appealing than before, China won’t stop growing either. Equally, the old certainties are dissipating. More than ever, manufacturers need to adapt and change with China. Opportunities will continue to exist, although competition will get fiercer and input prices will continue to fluctuate wildly. Planning ahead is more important than even. Just don’t rely on today’s, tomorrow’s or yesterday statistics – dig a little deeper for a more realistic appraisal of the ‘next generation’ China that is emerging.
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From Stellar Statistics To Economic Realism – Part II
The need for inbound economic realism is simple. China’s realises (and actually knew this long in advance of the global recession) that its economy requires massive restructuring over the coming years. International demand for cheaply produced goods has fragmented, and – according to July’s export figures, which fell 23 per cent year on year – is continuing to do so.
In addition, Fu Ziying, China’s Vice Minister for Commerce, this week admitted that Chinese domestic consumption remains too weak to offset the slump in global demand. This admission zaps the ‘booster’ view that domestic consumption could seamlessly replace export volumes in the near future.
The domestic consumption replacement theory never was a realistic scenario at this stage of China’s growth, but the admission from a high-ranking government figure should be seen as positive as well as negative. A significant degree of economic candidness is now accompanying the slew of upbeat China statistics to which we have become accustomed. It’s all about economic realism, now.
The challenge for manufacturers is to study and address the opportunities, as well as the difficulties, that lie ahead. China’s economy is changing, and will continue to do so. And just because the figures are currently less appealing than before, China won’t stop growing either. Equally, the old certainties are dissipating. More than ever, manufacturers need to adapt and change with China. Opportunities will continue to exist, although competition will get fiercer and input prices will continue to fluctuate wildly. Planning ahead is more important than even. Just don’t rely on today’s, tomorrow’s or yesterday statistics – dig a little deeper for a more realistic appraisal of the ‘next generation’ China that is emerging.
This entry was posted on Monday, August 31st, 2009 at 1:42 pm and is filed under News commentary. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.