Newsweek
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Jan 15, 2009 06:29 PM
By Mary Hennock
It was the sort of good news that makes everything look worse. We now know that China's economy surged 13 percent in 2007, elbowing aside Germany to become the world's third biggest economy. China's National Bureau of Statistics had previously put 2007 GDP growth at 11.9 percent, but on Wednesday the bureau revised that figure upward.
Nobody celebrated. Far from popping champagne corks, China-watching economists -- to say nothing of nervous Chinese officials -- are keeping an ear cocked for the sound of mobs and breaking glass.The economic crisis has stirred fears of greater instability as laid-off workers protest. Indeed, some 1,000 construction workers rioted over unpaid wages on Tuesday, Reuters reported citing the Hong Kong-based Information Center for Human Rights & Democracy. About 500 riot police battled the protesters for control of a bridge over the Yangtzse River in Anhui Province, and 10 workers were injured, according to the report.
Already, officials highly-placed enough to know have warned that China may not make its official target of 8 percent growth in 2009. That's serious because 8 percent is the magic number the government says it needs to keep unemployment manageable. Making the 8 percent target will be "exceptionally arduous", Liu Mingkang, chairman of the Central Banking Regulatory Commission (CBRC) was reported by Bloomberg as saying on Monday. That's blunt language for a bank regulator. These guys normally try to sound as boring as possible to avoid panicking the markets. But he's not alone. "There are downside risks to the goal", China's central bank governor Zhou Xiaochuan said. And Premier Wen Jiabao has promised yet more money to top up the government's already-$600 billion stimulus pot before Chinese New Year starts next weekend. The country's stimulus package is the biggest in the world set against the overall size of its economy and only the US has outstripped it in monetary terms.
Government and private sector economists expect the economy to have expanded in 2008 by just over 9 percent when the data is released later this month. There's less harmony on 2009 forecasts, though, which some economists are pitching as low as 5 percent. With other major economies shrinking that might sound good, but China is still poor despite nudging into third place on the podium behind the US and Japan. China's per capita income averages only $2,360 a year, according to the World Bank. So what then if NBS' number crunchers have found an extra $113.8 billion-worth of goods and services in 2007, raising the overall output to $3.76 trillion compared to Germany's $3.32 trillion, based on that year's average exchange rate. It just emphasises the scale and speed of the slowdown.
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