Things are looking down in the far east, just like everywhere else:
China’s growth rate has been forecast to be about 9 percent in 2008, down from 11.9 percent the year before and close to the 8 percent that economists say China must maintain in order to keep the labor market stable.
“China is under growing tension from its large population, limited resources and environment problems, and needs faster reform of its economic growth pattern to achieve sustainable development,” Hu said, according to the People’s Daily newspaper, the official Communist Party newspaper. He did not provide specifics.
This hardly counts as an economic model, but for my part I just don’t see how China could possibly maintain 8 percent growth if we have simultaneous recessions in Japan, the US, and the Eurozone. And all indications are that we’ll have simultaneous recessions in those countries. Keep in mind that six percent growth would be, for a country that’s not China, an impressive figure — especially under bad conditions. But if China is unable “to keep the labor market stable” then I think you have to wonder about what the consequences of that would be for their political stability.