There was a distinct whiff of triumphalism in Beijing in the weeks after the collapse of Lehman Brothers. Chinese officials speculated aloud about whether it would be wise to lend the Americans the money they needed to bail out their sinking banks. There was tut-tutting about American profligacy. The famous prediction by Goldman Sachs that the Chinese economy would be larger than that of the US by 2027 was revisited – perhaps it would happen even sooner than that?
But two months into the global financial crisis, things look much grimmer for China. In fact the only recent examples of social unrest in one of the world’s main economies have come there, not in the west. Laid-off workers in factories in southern China have staged protests that had to be contained by riot police. There have also been strikes and violent protests by taxi drivers in some cities across the country. The notion that the Chinese economy has so much momentum that it has “decoupled” from the US looks like a myth.
The economic statistics tell their own story. Last week the Chinese government announced that the country’s exports fell in November, compared with a year earlier, in the first such monthly drop for seven years. There are said to be 1m new graduates looking for work. It is generally held that the Chinese economy needs to grow at 8 per cent a year to absorb all the new workers coming on to the market. But new projections suggest that Chinese growth next year will be lower than that – possibly much lower.
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