Chinese exporters are undergoing a severe shock

There is an age where maturity is required on its own. For Beijing, it must be thirty years. At the time of blowing the candles of three decades of capitalism, China is poised to return to the rank, economically speaking. The Middle Kingdom is today a kind of economic UFO which was built by trade, a strange creature enlarged at the level of its exports but malingre for what concerns the consumption of households. Long ago, Beijing strategists know that this imbalance is not healthy in the long term. Today, at the time when the developed markets into recession, Beijing will be forced to operate its internal dynamics while finding less novel growth rates. The financial crisis that rocked the world will serve as spark reforms became more and more inevitable. The unidentified economic object has more than no choice but to engage on the path of normalization.

Chinese exporters are undergoing a severe shock. Low value added and heavily dependent on export sectors are threatened. More than half of companies manufacturing toys including went bankrupt. China embarked on a diversification of its export destinations, although not enough to immunize it against the current shock. After years of over 20 annual growth, China's exports currently appear to increase at rates around 10. No disaster, therefore, but undeniable stroke of brake, which directly affects the economic growth. This was "" to 9 in the third quarter, a figure lower than all the forecasts. In a country where often considered to be an expansion of about 8 to prevent the unemployment increases and does lead to social tensions, authorities came in a zone of turbulence.

Look closely, however, it is as of 2006 the rate of growth of Chinese exports started to decline. The international economy was yet, then a thriving. To explain this apparent contradiction, can here be interested in the analysis developed by Hervé Liévore, strategist at AXA IM. China, explains, has developed an unrivalled strength in products with low value added, through economies of scale. By producing astronomical quantities, it was unbeatable on the price. Queen of the "low cost", it now seems to "eating his white bread", j. economist, because it has achieved in this type of product "a global market share extremely high, sometimes tending towards monopoly." How to continue to grow strongly in markets where it has already earned the lion's share In ten years, China's exports rose from 3.4 to 9 of world exports! Poorly imagine China continue indefinitely on this momentum, knowing that only the United States "sustainably" crossed the limit of 10 in economic history, judge. Sentenced to tackle more value added products, China will not crush its competitors by the only economies of scale, and it will return to more traditional competition conditions with other countries. And gain market share less quickly.

For exogenous, both short-term and structural reasons, China must draw a line on the time where it had essentially on its external engine. But its own societal mutations the grow in the same direction. Because the time where it was believed the "labour reserve" Chinese inexhaustible seems gone: ready to migrate to the cities Chinese rural would only 50 million. This is the conclusion reached by the Chinese economist Cai Fang, who heads the Institute of demography and labour economics. It concludes that the influx will stop increasing here in a year or two, and will begin to fall in a small ten years. For Cai Fang, labour shortages that already for some years in the older industrial areas are spread on the territory. Therefore, inevitably, the cost of unskilled labour will increase. Medium term, the prices of the products of "factory of the world", they will also, to standardize.

Or the work of Cai Fang are relayed by the official media, which proves that the authorities are determined to adapt to this new situation, so to operate domestic demand. The measures announced in recent weeks are, indeed, in this sense. Huge investments in infrastructure, including rail, are planned. But, as an equivalent strategy had already saved China from the Asian slump ten years ago, the country is already well with infrastructure. The multiplying effect on the economy will be less. Is therefore time to stimulate the consumption of households, therefore inject purchasing power. A comprehensive plan of the 800 million rural support was announced, aimed to double their incomes by 2020. It is very likely that the planned establishment of a social security system will be also accelerated: it is the lack of social protection that requires the Chinese save and limit their ability to use. All these recipes were intended to allow the economy of China grow more using its own resources. Their implementation will take lot of time, as the great work driven by Beijing. But their cost does not fear a State which emerged this year, a budget surplus, and whose public debt is only 20 of GDP. Keynesian economics is a luxury that can afford China.

One might add that the authorities are now aware of the adverse consequences for the global economy of the policy of "all-export". Because, by flooding the world of its products, Beijing has amassed a treasure of war. Which was mainly placed in us debt, thus fueling an imbalance of the current global crisis. At the age of thirty, capitalist China cannot therefore escape the adult role it must play in the governance of the global economy, as evidenced by the discussions this weekend at the Asem forum. At any point of view, the financial crisis will make it a mature economic power and a major hub of global growth. Eventually, it will then remain a question: can it become a "standard", autonomous economy and reactive to the expectations of its own consumers, while keeping a dirigiste political system