To say that China production grew at 'only' 6.9 percent is a salute to the previously high numbers achieved there. It may be the lowest number in 25 years, but certainly it is still impressive. Even more impressive, in the context of an economy in transition, from developing at a very rapid pace over the last forty years with the metropolitan areas shining at international standards; now they are trying to focus on domestic consumers, and not so much on exports. China has all the hallmarks of an economy that is on par with the major economies, save in some respects which would be receiving attention in the near future, I imagine.
China is a net investor overseas, in U.S.A., Portugal, lot of the African nations, and is engaged in joint-ventures with the U.K. and other European nations. This would certainly show up in their gross national product in course of time. There are surely other places they can invest in. Their huge foreign exchange reserves could presumably be utilised to this end, and China will have a growing sphere of influence internationally. The recently devalued Yuan may be thus presented to the world, together with the favour of trading with China, and it is not a mere hope and wish that the Yuan may yet become an internationally acceptable and bankable Reserve Currency. Five years ago, that was the unspoken hope; Today it seems that day draws ever nearer.
There is unutilized capacity in the factories in China, so this is something they will keep and eye on. If demand for their products increases worldwide (there must be huge scope in Africa and other developing nations), they could swing back into action, ramping up the production.
I note that they are not putting too many more people in military conscription, as was compulsory in the past. This gives them huge scope to increase university attendance (although the two are not mutually exclusive, focus on one may be more rewarding) and their recently inaugurated 2-Child policy will bring a highly educated young workforce into being, to serve the ageing population as well, and the Chinese people certainly love their elders.
Now for the transition to what could simulate the 'major' economies, the government will have to bring enhanced programmes of free medicine, hospital services, training, as well as social security benefits.
That will create a boost in the economic system, and breed a middle class with still higher aspirations.
That phase can be set to develop once the Chinese leadership feels it appropriate to launch it. I trust it can be soon, to fill in the 'vacuum' that would otherwise leave some of the population unemployed and feeling purposeless. That the enlightened leaders will not wish to let their people suffer, if they can possibly avoid it.
I think in future the world media will not be excitedly saying that China is slowing down; it is in a state of transition, and as part of that, it is decelerating. Instead, with their available financial might, China might be rolling out the social benefits and health and well being projects that appear to be the most obvious ones they could implement.
In the meantime, I hear they have been buying up all the Oil that was flooding the markets. This may be a strategy of diversification. Or else, their production is about to pick up. We'll all hear in the next few months. Potentially, the picture is still very rosy.
Durudarshan H. Dadlani
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