Wednesday 8 October 2008


CHINA'S VIEW OF THE FINANCIAL MESS: ALARMED BUT CONFIDENT

Bill Powell

Time, October 7, 2008

In Beijing's corridors of power, economic-policy makers are said to be watching in horror as a U.S.-led financial meltdown gathers force around the globe. According to the rapidly congealing conventional wisdom, China, ostensibly the world's economic superpower-in-waiting, is taking copious notes on how not to run a financial system.

But that picture is only partly correct. That China is watching the meltdown with alarm is certainly true. The global economic slowdown on the tail of the financial-market blowout is already clear and present on the mainland. In what has been one of the world's prime economic engines for the past five years, growth is slowing fast. Look only at the price of steel — as useful an industrial proxy for China's economic boom as any. According to Mysteel, a Shanghai-based consulting firm, the price for products used primarily in construction have fallen to less than $590 per ton, down almost 20% in just four months, forcing some companies into the red in what had been a booming industry. Baosteel, one of China's largest steelmakers, has cut prices twice since August, and its CEO is glum: The era of rapid growth for China's steel industry "will soon be remembered as history," says Xu Lejiang.

But fears that the fallout from the U.S. subprime mess might cripple reform of China's financial system — now only partly open to the world — may be overwrought. Earlier this week Beijing sent a clear signal that, notwithstanding the mess in the U.S. and Europe, it still seeks to develop, slowly but surely, a more sophisticated capital market. China's State Council has approved a plan to allow margin trading and short-selling, giving domestic investors in China's A-share market "new opportunities to hedge and leverage their positions," says Jing Ulrich, head of China Equities at JPMorgan Securities in Hong Kong.

(...) [artículo aquí]

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