China's leaders losing battle on economy
The prime minister of China made the comment about a month ago that the nation's economy would grow at 8 percent this year. Many Asia analysts have put that number at closer to 6.5 to 7 percent, which in a global recession would be extremely impressive.
But the wheels are already starting to come off these forecasts with three quarters of the year still to go.It makes little sense that an economy based largely on exports could out-run the drop in global growth. The U.S., E.U., and Japan are sharply cutting imports from China as consumer confidence and buying drop.
China has said it can rely on its huge middle class to buy a great deal of what the world's most populous nation produces. But a large number of these people are being laid-off as factories close due to lack of demand for manufactured goods.
According to the Associated Press, "The purchasing managers index by brokerage CLSA Asia-Pacific Markets -- based on a survey of some 400 companies -- showed manufacturing shrank for an eighth month." In an exporting nation, can GDP move up sharply if manufacturing is moving down? That would be improbable.
China's economy is worse than its government is letting on.
Douglas A. McIntyre is an editor at 24/7 Wall St.