More horrible numbers for China’s economy. Steel production in November: down 12.4 per cent year on year; Electricity production: down 9.6 %; fixed assset investment growth: declined to 26.8% in Jan-Nov from 27.2% in the first 10 months of 2008. The last figure is particularly relevant as FAI accounts for 42 % of GDP growth. Most economists warned that the numbers would be shocking and that we’d have to wait until the second quarter of 2009 at the earliest before the stimulus showed any result. Still, the speed and scope of the decline remains hard to digest. Perhaps too many years of double digit growth warped my judgment. Anyway, it will be a long six or so months for both those thrown out of jobs and the cadres watching to see what the reaction of the newly unemployed is.
Apropos of which, I saw an article recently in which an eminent China scholar was quoted as saying that the Obama administration national security people should have some sort of contingency plan for a worst case scenario in China, ie if things fall apart, the center cannot hold and so on. I dunno. There’s plenty that can go wrong. of course. But even if you are supposed to plan for the worst and hope for the best, what exactly is the worst case, assuming the economy doesn’t respond to stimulus, tens of millions more lose their jobs and so on? Riots in the streets of Beijing and Shanghai? Civil war? Warlordism? China split into fiefdoms with Beijing powerless? The overthrow of you-know-who by the enraged masses? Seems like a real stretch to me if for no other reason than the centripetal forces, self-interest, nationalism, sheer fear of the unknown (read “chaos” that old Chinese bugbear) are so strong. A chronic state of social unrest seems more likely. I guess I’ll have to contact the professor and ask.