The chief of China’s economic cheer leaders, the loquacious Premier Wen Jiabao, said that the nation’s economic stimulus elixir has begun to do its magic. He may be referring the the fact that his economy is still growing at 6% or that money being pushed through the banking system is allowing business activity to remain modestly healthily.
According to The Wall Street Journal, “Mr. Wen said China is in relatively good shape because the country has sufficient capital, a solid banking industry, and rich labor resources that will help it overcome the crisis.”
What he does not have is exports and China will not have that which has been the lifeblood of its GDP growth since the “economic miracle” was begun by strong man Deng Xiaoping in the late 1970s and early 1980s. Without exports, China is no more that a pedestrian economy. And, the dying economies in Japan, the US, and Europe are not sucking in goods from the world’s most populous country.
Unemployment among China’s consuming class has been rising sharply and their are rumors of labor riots in the huge metropolises that the government has built in the interior of the country.
By burning down his own middle class, Wen is losing the loyalty of his own citizens, who, without work, are migrating back to their farms.
Douglas A. McIntyre
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