Tuesday, December 23, 2008

Signs & portents (The End of Days?)

People sometimes ask me, "So, how is the global meltdown affecting China?"

Well, it's difficult to say.

One of the first things I notice is that people seem to favour the 'tsunami' metaphor rather than 'meltdown'. Does that have any wider currency, or is it just a regional linguistic preference? A couple of the Chinese "academics" I edit for have used it already, and I noticed Hong Kong supremo Donald Tsang say it on TV the other day. I suppose, as a metaphor it has the advantage of suggesting transience - whereas a 'meltdown' can just go on and on (hmmm, perhaps not a good time to mention 'the China syndrome'?!), and even when it's over leaves an irremediable mess.

Then, the air has been uncannily clear over the past few months. I mean, even cleaner than it was during the Olympics. It started getting all crappy again pretty much the instant the Paralympics was done, but then it suddenly brightened up again at the beginning of October and we've been almost entirely smog-free ever since (we've had just a few bad days, but I'm sure it's been almost entirely domestic coal-burning and the occasional blitz of ancestor-worship bonfires, not industrial haze). Admittedly, the weather is usually pretty good through much of the autumn and early winter: it's an especially windy season, which helps; also, the government's statistics-wranglers are usually working desperately to hit their promised quota of 'blue sky days' for the year, and so ordering sporadic factory shutdowns to achieve that. However, we do also get a lot of really shitty air quality days through October to December every year, and this year there have been NONE. Chinese friends will insist that factory closures have thus far been limited to a few highly-publicised incidents in Guangdong, but..... I really think there isn't much manufacturing industry going on in the entire country at the moment.

There is a lot of forced jollity in the media about how pro-active the government is being in trying to stimulate the domestic economy (to bail out the rest of the world - thank you, China!). However, China Daily last week also mentioned a survey which suggested that the typical response of Chinese citizens - 3 out of every 4 respondents! - to the economic crisis was to "save more" (and, given the continuing crapness of China's banks - much improved since I've been here, but still pretty terrible - much of that saving is going to be, like my own, under the mattress). China is seeking to maintain its nominal GDP growth - and restrict unemployment - by pouring money into state-funded infrastructure projects. Stimulating domestic consumer-spending is a bit of a pipe-dream, I fear. And when you've become used to a decade or more of continuous double-digit growth, 7.5% counts as a recession.

The roads are oddly deserted. Really, the traffic is much better now than it was during the Olympics. OK, there has been a new restriction brought in to cut down car use (registration plates with a certain last digit are banned from operating on a particular day: I'm not sure if that works out to a 1-in-10 or a 1-in-5 reduction - though it seems to me like a pretty difficult system to publicise or enforce effectively); but during the Olympics, there were similar measures intended to cut down car use by half, and, in addition, most government-owned vehicles (nearly half of the total on the roads in the capital!) were pulled out of service, and a huge number of people quit town for a fortnight to avoid the whole circus. I would say that the number of cars on the roads now is significantly lower than it was during the Olympics, and down by maybe as much as 50% on what it was 6 months ago. Yes, maybe some people just learned to do without their cars during the period of Olympic restrictions - but I rather think that at least some of this lull on the roads is the result of reduced business activity (or of belt-tightening, loss of economic confidence, converting that second-car-for-the-Mrs into something-more-portable-like-gold). I am thus far something of a lone conspiracy theorist in making this observation, but I'm confident that in time more and more people will realise the truth of this. When the cars disappear from the roads in these sorts of numbers, it's a sign of something pretty dramatic - and not good.

Oh yes, and this may not be so much of a 'meltdown' thing as a 'China's economic miracle is built on straw' thing, but..... a couple of weeks ago I learned that almost all of China's domestic airlines have been losing money hand over fist for the past year or more. This being China, their response has been to start omitting to pay their landing fees to the airports. Since the state has to prop up this industry (and is probably still the major investor even in nominally privatised airlines), we can be sure that there will be some kind of surreptitious bail-out. But we had reached the awkward, ugly, risible stage of having the chairman of the Airports Association going on TV to threaten the airlines with being refused landing rights if they didn't make good on their arrears. What larks.

Ah, and then I mentioned the other week the curious phenomenon of how massive road and sidewalk mending operations around the city of Beijing appeared to have been abandoned half-finished for two months. Something odd going on with that too......

My basic Jeremiah message (or perhaps Cassandra?) for you is this: if you're waiting for China to dig the rest of the world out of a hole, think again. China is built over a hole of its own, and this global crisis might just cause it to topple in. Interesting times.....

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