From Sydney Morning Herald:
For those getting dizzy watching China’s roaring GDP of 10 per cent and record trade surpluses, here’s a more sobering assessment: “For the most part China remains what it has long been: a large country, inhabited by many people, most of whom do not have any money.”
That analysis, from the editor of The China Economic Quarterly, is reductionist in the extreme. But it is a reminder that for all of China’s aspirations, the once isolationist Middle Kingdom is a work in progress.
Economic growth is expected to slow in 2007 but remain around 10 per cent. Inflation will remain low, and China’s high trade surpluses – of up to $US170 billion this year and up to $US220 billion next year – appear set to continue, despite the protestations of many local economists. While a severe recession in the US could knock off a percentage point, it is unlikely to be enough of a drag to cause real social and political problems for China’s leaders in the lead-up to 2008, when a healthy economy is crucial to a successful Olympics.[Full Text]
