The mood was festive but anything but bullish when China greeted the Year of the Ox on Monday Jan. 26 with fireworks feasts and parades. Regarded as a sign of peace and prosperity through diligence the ox hardly seems the proper astrological beast for a country beholden to exports during a time of decreased global demand and double-digit percent decreases in importations.
But let’s not be quick to call the ox an incongruous representation of the coming year. With the downturn of world markets perhaps the zodiacal brute is the perfect metaphor for China’s economic conditions. After all an ox is nothing more than a castrated bull functional but tempered of vigor and stripped of virility.
The World Bank has estimated that China’s real GDP growth will slow to 7.5 percent in 2009 paltry compared to their 2007 numbers of 11.9 percent though still an extraordinary rate compared to the United States’ 3 percent five-year average.That said the World Bank’s estimate is among the more optimistic forecasts for the Chinese economy. Several banks including the prominent Société Générale have released predictions indicating that China may be tumbling to join the rest of the world in an out-and-out recession. At this time such dour predictions of recession should be taken with a grain or perhaps even a handful of salt. But that’s not to say China is not on the edge of calamity as there is more at stake than simple GDP percentage fluxes which are at best deceptive indicators of social and economic prosperity. Over the past decade millions of workers have flooded China’s industrial cities to fill posts at newly erected factories and now compose a migrant workforce of more than 200 million strong. Home for the New Year holiday and its requisite feasting many of these workers will not be invited back to their jobs. In fact the Chinese Academy of Social Sciences estimates that between 20 and 25 million of these migrant workers will lose their jobs by the end of 2009. They will follow the six million other workers who have already lost their jobs since the beginning of the crisis.
A possible social fallout must also be taken into account. China already boasts an unsettling average of 265 worker protests a day. With massive unemployment upon the horizon how will the authoritarian government of Beijing – which maintains power through the until now fulfilled promise of unfettered economic expansion – maintain a peaceable curb upon social unrest? How will they sate the needs of people who have already tasted the fruit of prosperity? Perhaps their $586 billion stimulus package designed to improve tax cuts infrastructure and social programs will do it for them. If not disaster could be upon the horizon.
All this postulation of future doom and gloom is just that postulation. The fact of the matter is that the progress of the Chinese economy long thought to be impervious to the financial crisis has slowed stagnated and will join the rest of the world. But unlike the West and much of the rest China has extensive savings in capital investment – a true catalyst for economic success. And as we Americans borrow and spend our way to trillion dollar deficits the Chinese people managed to save 51.2 percent of their GDP last year. Should we care? Does the deficit even matter? The new administration in Washington says it doesn’t. I wonder if those in Beijing think the same particularly considering the new Treasury Secretary Timothy Geithner has already accused China of unprincipled manipulation of their currency in order to boost exports.