China’s Confidence vs. World Economic Forum

Written by Julen Madariaga on January 15th, 2009

You know how Wen Jia Bao asked us this week to have “faith and determination“, and added that the “nation will be the first to recover” from the crisis and grasp the opportunities available. Then come the experts of the World Economic Forum, who are getting ready for their yearly skiing holiday, and they publish a prediction right on their front page:

Global Risks 2009: a new report from the World Economic Forum, identifies a deteriorating global economy, a hard landing in China…

In the report , which you can download here, they go on to speak of China 09 GDP of “6% or below”, a point which the international media is quick to report. How’s that for the confidence. Ouch, one 2 good points below the waistline of the CPC’s 8% , and right in the family jewels.

Mind you, I am not writing this to pick on Wen’s predictions. First of all, the WEF’s report is only making hypothesis, to see their possible impact on the World economy. Second, I think Wen would be as likely to get it right for China’s economy as the gurus of the WEF. After all, the CPC prepares its predictions with the advantage of insider information, and it suffers less distractions than the vedettes at the Convention of Dismalness.

On the other hand, it is a long time already since the Forum passed the heigh of its influence and it looks this year more irrelevant than ever. In the end, the important decisions for the World economy will be taken by Obama’s team and the CPC, and it is unclear how either of them will listen to the WEF. Most importantly, the role of the Forum as a brainstorming event has largely been taken over by the econobloggers, as we saw in this fascinating article you might remember from last month.

Inexplicably, we have not been invited to Davos this time, so we’ll hit the road in Shanghai instead and see how the faith and determination is doing, and whether there are signs of  faltering in the good old Shanghai shopping spirit. A big part of China’s economic Wall is made of the faith of its consumers, who are the ones supposed to make up for the lack of exports. Here’s how they are faring in Shanghai:

Nanjinglu: The usual mobs of shoppers and sellers in spite of the biting cold.

Xujiahui: It is difficult to walk the Street, the shops are as full as ever and the official sign on the Bridge reads: “Do Well Your Economic Survey, capture the situation and the strengths of the District, and promote the development of XuHui.” This district is also undergoing an economic survey, like the one done by these funny villagers, but hopefully using more standard statistical methods.

Sitting 牛: Hordes of consumers worship the goddess of consumption, the Sitting Cow.

We Hire - I got this last night right next to my place. I haven’t been keeping track of the changes these last weeks, but all I can say is that we still see many signs like this. The red character means: We hire.  1200RMB a month plus extras. Searched: waiters, shop manager, dish cleaners, etc.

So there you go, in Shanghai, in spite of some people getting worried and a few foreign startups having a hard time to meet ends, it looks like the F and D are still holding stong. Let’s hope they stay right up there throughout 2009, and we might avert this one of the Global Risks.

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Comments so far ↓

  1. Jan
    George Saines

    Interesting article ULN. I recently read about some pretty dire predictions for the US economy as well (something like a potential for up to 5% economy-wide contraction in 2009), but I imagine that for China, which has been on such an enormous growth curve for the last 10 years, an economic slowdown, let alone a contraction would seem cataclysmic.

    In fact, I recently talked to my former college economic adviser, who was almost called up for duty at the Fed (when the Greenspan-Bernanke switch occurred he was concerned they’d call his name and he’d have to drop everything to go to Washington). My simple question to him was “what would you do if you were in Bernanke’s shoes right now?” He said, “I’d crawl under my desk and not come out.”

    That’s pretty scary, from someone who knows a heck of a lot more than I do. It’s a good sign that people are still hiring in Shanghai. All the papers here are filled with stories of highly qualified people being unable to find jobs.

    Keep up the good posts. I always enjoy reading about current economics!

    [Reply to this comment]

  2. Jan

    Hi, long time no see. How’s the Skritter doing.

    Yes, actually from what I have seen and been told by taxi drivers, the laobaixing are still doing fine. I suppose the crisis hasn’t reached their level yet. It is true there has also been some layoffs of white collars, but nothing spectacular for the moment in Shanghai.

    To the predictions of economists, whether they are famous or not, I give little credibility. Economics is good at analyzing the past, but not at guessing the future.There were as many famous economists praising the financial system a few years ago as there are now criticizing it.

    That’s why I say Wen Jiabao can make a better prediction than all Davos gurus together. Of course, a different thing is whether he wants to disclose his real guess or not, politics is politics.

    [Reply to this comment]

  3. Sep
    Bill Bartmann

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