Recession in China too.
China after double digit growth lasting 7-8 years is now stuttering. Q4, 2008 recorded 6.8% growth. Analysts feel 2009 may be more worrisome. Year may see growth of 5% only. After having witnessed skyrocketing growth, Chinese will find the current slowdown difficult to accept. Nation, many believe is sitting on the precipice of civil unrest as job market is shrinking and many workers are being laid off.
Migrant workers, who have come to Chinese cities for work, will be returning to their homes for Chinese New Year celebrations. Authorities, hope they stay there much longer. Chinese industry is export driven. With demands in US and EU stagnating, the growth bubble was bound to bust. But it has happened all of a sudden. Production lines have been shut due to piling up of inventories. The adverse reports on Chinese toys and questions raised over quality of milk used in food processing industries have made the conditions worse.
India, the other Asian growth engine, at the hindsight, has its growth in both exports and in-house. The share is balanced. This means India, unlike China is in better equipped to weather the recession storm. But fall in exports will surely hit India.
Guardian reports predict civil unrest in China over lack of job opportunities and stagnating growth. It is going to be a tough year for communists who in past, have embraced capitalism with startling results. After Olympics, which China has successfully hosted, the country needs a strong growth propeller to keep up its growth momentum. Recession and stagnating demand overseas have thrown spanner in China’s policies. And like elsewhere, it’s going to be tough times at Beijing.
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