Opportunity Arises from Crisis: China and the Consequences of the Recession

17 Nov Opportunity Arises from Crisis: China and the Consequences of the Recession

While the Western economy is groaning, all hopes are pinned on China. The Chinese financial system is not integrated into the international financial system. There are no tradable debts or derivatives. The banks have very high capital reserves at their disposal. In addition, Chinese consumers have one of the highest saving ratios in the world, are not heavily indebted and continue to dream of moving up in the world. But in China too, the boom is over. The country is feeling the full force of declining international demand. In the export business and the art market, the speculation bubbles are bursting and the real estate market is ailing too. Although growth of 8-9% is still predicted for the Middle Kingdom for 2009, the government claims such growth is necessary just to ensure social stability. According to a Chinese proverb, opportunity arises from crisis. Even the way the word 'crisis' is written seems to suggest that: one of its two characters, Ji, stands for opportunity. But although more opportunities are opening up for the Middle Kingdom than for many other countries, the global crisis is nevertheless hitting China hard.