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Monday, July 15, 2013

China’s Economic Growth Slips Again

BBC video)" href="http://media.wbur.org/wordpress/11/files/2013/07/0715_china-growth.jpg">Almost every shop is closed on this street in a once-booming town in China. (BBC screenshot)

Almost every shop is closed on this street in a once-booming China town. (Image from BBC video)

The Chinese economy is still the second largest in the world but there are signs it’s lagging.

Figures out today show a slowdown for the second quarter in a row.

The BBC’s John Sudworth visited a town that is home to one of the country’s largest ship builders to see the effects.

Transcript

JEREMY HOBSON, HOST:

From NPR and WBUR Boston, I'm Jeremy Hobson. It's HERE AND NOW. Economic growth is slowing down in the world's second largest economy - that would be China - where newly released numbers show the economy grew at a rate of seven and a half percent last quarter. That is not a recession by any stretch of the imagination. But as the BBC's John Sudworth reports, the effects of the slowdown are evident.

(SOUNDBITE OF RESTAURANT)

JOHN SUDWORTH: In a small restaurant in the town of Changqingsha in China's eastern Kiangsu province, the chef is still at his station, but the customers are dwindling.

UNIDENTIFIED MAN #1: (Foreign language spoken)

SUDWORTH: They are the remaining workers at the Rongsheng shipyard, one of China's biggest. It was opened here less than a decade ago, but it's now in deep trouble. Twenty thousand jobs have been lost, and it's appealing for government help.

UNIDENTIFIED MAN #2: (Foreign language spoken)

SUDWORTH: We all know that Rongsheng lacks money, this worker tells me. If the government can help, it would be a good thing. And then you come across this street, very close to the Rongsheng shipyard gates. This used to be one of the busiest streets in this town that's been built up around the shipyard, and it's now almost completely deserted, except the odd one, every shop along here locked up with one of these big bolts with a chain across it. An old shop sign there just rattling in the wind.

It's important to stress, of course, even standing on this street today, that China's economy is still growing, motoring along, in fact, by Western standards. But the point is, the growth rate is slowing, and these scenes might be the first glimmer, the first tangible sign of the pain that some of that slowing growth will cause across the wider economy.

UNIDENTIFIED WOMAN #1: (Foreign language spoken)

SUDWORTH: Successful industries, of course, support other industries, and failing ones have the opposite effect. These migrant workers and their children selling watermelons at the side of the road are thinking about following those who have already left.

UNIDENTIFIED MAN #3: (Foreign language spoken)

SUDWORTH: Business is really down compared to where it was last year, this man says. It's just too quiet.

UNIDENTIFIED MAN #4: (Foreign language spoken)

SUDWORTH: Rongsheng and its workers might want government help, but it's already proof of the limits of China's old model of growth. The town's brand-new but empty hotel is a testament to the overcapacity in China's overinvested shipbuilding industry. Future prosperity, the government's so-called China dream, now depends on rebalancing the economy to one based on consumer spending. It's highly risky because to do so, policymakers know - in the short term, at least - they actually need a slowdown in growth.

UNIDENTIFIED WOMAN #2: (Foreign language spoken)

SUDWORTH: It's hopeless, one of Changqingsha's few surviving shopkeepers tells me. There's no dream here.

UNIDENTIFIED WOMAN #2: (Foreign language spoken)

SUDWORTH: What happens next at Rongsheng is a test of the government's true intentions. Will it step in with a bailout in the hope that orders pick up again, or will it send a signal that a big and painful shift in China's GDP model is now well and truly underway?

HOBSON: The BBC's John Sudworth in China. And in a moment, we'll talk about new reports of doping in track and field. That's next. HERE AND NOW. Transcript provided by NPR, Copyright NPR.


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