Similar hopes are being dashed in other large, developing economies of the so-called BRIC—Brazil, Russia, India and China.
Manufacturing in China has declined for the past seven months. Factory output growth was lower in April than at any time since the onset of the 2008 worldwide financial crisis. An HSBC Corp. survey of Chinese manufacturers points to a further weakening in May.
In April, exports grew by 4.9 percent, compared to more than 20 percent in 2010.
The rapid economic development in China over the last few decades was based largely on luring foreign capital to relatively low-cost Chinese labor, building up a massive industrial capacity and capturing the largest share of the world’s merchandise export market. Far from being excepted from the economic contraction taking place in many of the most developed imperialist nations, the main engine of China’s economy finds itself low on gas.
While data indicates China’s economy was 8.1 percent larger in the first quarter of this year than a year earlier, “virtually all of that growth took place last year,” reports the New York Times. “The economy barely grew in the first quarter compared with the fourth quarter of 2011.” This growth rate was the lowest in nearly three years.
China is also the world’s largest importer of many commodities, including iron ore and copper, and second-largest consumer of oil. Imports to China rose just 0.3 percent in April from the previous month, hitting export markets from Indonesian raw materials to European factory equipment and luxury goods.
China’s massive real estate bubble is also bursting. Government indexes show prices falling in more than half of the country’s top 70 urban markets, reported the Times. Residential land sales in China’s 20 largest cities fell 92 percent in the first week in May.
The resulting drop in profit-based housing construction has led to declining jobs in that industry. Developers are “abandoning the longstanding practice of floodlighting construction sites and working around the clock,” a Salt Lake Tribune article said. “They have cut back to one daytime shift.”
The capitalists are nervously watching developments in the country. The New York Times wrote a number of prominent and detailed articles expressing trepidation over factional fissures within the Chinese Communist Party bureaucracy brought into focus with the ouster of Bo Xilai, party chief in Chongqing province. Two of these appeared in the May 20 issue of the paper: “In China, Fear at the Top” and “Leader’s Fall in China Put Allies in Peril.”
A May 23 article in the Washington Post titled “China’s Economic Crisis” opens with “speculation about power struggles in China in the wake of the ouster of Bo Xilai.” The paper ran a May 18 piece by David Ignatius titled “China’s Wobbly Transition” in which he characterized the situation as the “greatest internal crisis since the Tiananmen Square protests of 1989.”
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