Different China’s Will Report Different Impacts – From Recession and Stimulus

Friday, April 17, 2009 9:31
Posted in category Uncategorized

Conversations on the impact the global economy’s woes on China’s economy, and the actions take by Beijing to address those issues, are quite often over simplified to the point that members of the media, policy makers, consultants, and yes… even bloggers… tend to lump “China” into a single geographic market.

It is something while I initially tried to address in my early posts, have not taken the time to do lately. Something that became very clear while having brunch last weekend with friends and discussing the current state of affairs.

It was one of those conversations where we were arguiing our points, making our case, and doing our best to prove the other side wrong, but doing so in a way were we were all right because the context by which we were framing our positions were so different.

So, with that a new series is born.

A series that will look at a number of factors that readers should consider when wondering what the impact of the economy will be of either the failing western economies, or the impact of the massive stimulus package that Beijing has rolled out.

The 6 major constraints that I will focus on, that I believe are the most important, are:
1) A matter of geography – Looking China’s regional economies
2) Investment vs. Export vs. Consumption – China’s big 3 economies
3) State owned/ JV/ Private firms – Which structures are able to take the pain?
4) Sectors – some industries are better suited in a recession, some aren’t – some will make it, some won’t
5) Records of Success – some firms have good management, some don’t – some will make it, some won’t
6) Greed – Taking advantage of a recession to get out while the getting is still good.

As these are topics/ issues that we have discussed during the good times at All Roads, and have been shown to have an impact during those times, these constraints are equally important to understand as the economy looks for a bottom and decision makers are now looking to make some very different decisions.

Stay tuned to next week’s posts, and prepare your questions/ comments.

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2 Responses to “Different China’s Will Report Different Impacts – From Recession and Stimulus”

  1. Chris Devonshire-Ellis says:

    April 18th, 2009 at 2:05 am

    Hi Rich;

    You may also want to take into consideration the dynamics of the country on the nearest border, as cross-border trade at the next point will directly affect the local region and it’s own GDP. China has 14 neighboring countries and the impact these have on the nearest cities is little understood. Clearly the impact of North Korea on Dandong and Jinan is significant as is the same with Kunming and Nanning and Hanoi, in just two examples. We’re covering specifically this in a new series on China Briefing, and it’d be interesting to compare with your findings. “China GDP” is a bit of a myth when applying statistics to such a large country and only gives the mean performance. In no way do such figures indicate what is happening even on a provincial, let alone a specific city basis.

  2. Matt says:

    April 18th, 2009 at 7:27 am

    Good to see the man back! Rich it’s a good concept, and I think both you and CDE have it right when looking at GDP and similar measurements. It’s the various regional positions that count and are interesting, not the national position. Im looking forward to yr findings.