Hopes that China will keep the global economy growing at least a little bit next year
appear to be fading, according to a Bloomberg report. The World Bank just lowered its 2009 China forecast to 7.5%, and Jim Walker of Asianomics Ltd. is even gloomier, estimating 0% to 4%.
Even the World Bank forecast is bad news for a country that has averaged 9.9% growth for 30 years and reckons it needs 8% growth to avoid major unemployment problems. A major factor, along with slowing exports, is a sharp slowdown in China's building boom, which, as The Wall Street Journal reports Tuesday morning, is forcing many of China's 130 million migrant workers
out of the cities and back to their rural homes, where little or no work awaits.
China's woes are not good news for big Western companies looking to the Middle Kingdom for a healthy share of their own growth.
General Electric Co.,
Eaton Corp. and
Coca-Cola Co. come to mind, but there are plenty of other examples.
Long-term, of course, those bets still make plenty of sense. And there may be a little short-term solace as well. China has already announced a massive $586 billion stimulus package. But a budget surplus and nearly $2 trillion in currency reserves give it the ability to do more, and it probably will. -
Kenneth Klee
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