Sunday, December 4, 2011

China admits its growth problem sparking social unrest

The economic statistics from China may not be always reliable, but the trend has been unmistakable. The economic growth is not what it used to be. The manufacturing PMI has weakened significantly:


Even the non-manufacturing PMI is showing signs of stagnation. 


This is an indication of a slowdown in domestic demand, which China is admitting:
People's Daily: The index for new orders posted the biggest drop, down 5.3 percentage points to 47.2 percent while that for new export orders dropped 4.8 percentage points to 45.6 percent.
"Less active consumption in the off-season and the sluggish demand in the construction sector combined to weigh down the index," said Cai Jin, vice president of the CFLP. 
Anything but stellar growth brings something China is not prepared for - social unrest. The protests continue to spread.
Delaware Online: Reports of recent strikes at factories and other major employers, especially in southern China, reflect increasing pressure on Chinese manufacturers already grappling with surging costs for labor and materials.
Even government officials are beginning to openly get concerned.
BBC: Zhou Yongkang, a member of the politburo, asked provincial officials for improved "social management".
...
"It is an urgent task for us to think how to establish a social management system with Chinese characteristics to suit our socialist market economy," Mr Zhou said in comments published Saturday. "Especially when facing negative effects of the market economy.
If the euro-zone situation continues to deteriorate causing a further slowdown, not only will it impact global economic growth, but the unrest and the inevitable crackdown that follows may become a geopolitical and a human rights issue.

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