China – the false sense of hope value
A notable exception was the data from China: After already there in recent weeks, the purchasing managers surveys for a re-rising production and rising order volume indicated the show now even more indicators to the top: Cement and steel production, car sales and electricity have already attracted . One reason may be the giant Chinese economy package whose volume on the government in Beijing to 4100 billion yuan (about 480 billion euros) estimates.
Already, there are voices that say China’s recovery could be a powerful economic stimulus for the rest of the world mean. But unfortunately this hope is likely to be in vain. Even if China succeeds in its own economy to stabilize faster than the rest of the world succeeds: The economic engine for the U.S. or Europe is not good for the country.
Of course, the volume of China’s tremendous economic package – after all, the program is according to official figures nearly ten times as large as the German 50-billion-euro package, and almost reached the dimensions of the U.S. stimulus.
About China but in order to explain the global economic locomotive will make two mistakes: First, China’s importance for the global economy is still relatively small. According to latest figures made China’s gross domestic product last nearly seven percent of global economic performance – about as much as Germany’s gross domestic product. For comparison: The U.S. economy is still about three times as large. Second, exaggerated the official figure of 4100 billion yuan, the actual volume of the package. A substantial proportion of the expenditure was already planned and is therefore not an additional impulse. Also expects the Chinese government in its economic package the rising lending of state banks into it – a component that is normally in the rest of the world not as a fiscal policy will be counted.
Overall, from the package as a net momentum of perhaps nearly 1500 billion yuan (some 170 billion euros) over two years left – still a large sum, but by far not as impressive as it may at first appear. With luck it could be China’s government succeed in its economic growth for the year-end return to the vicinity of the eight per cent to bring identified as necessary to maintain social stability will be considered.
However a strong demand stimulus for the rest of the world to bring the economic package should be structured so that it imports to China anstößt. Especially the limited but is expected to be the case. China’s economy has a structural problem: The growth in recent years has been heavily on the export of consumer goods-oriented – mainly in the U.S., but also in the EU. Therefore, China has imported raw materials and machinery. Wages and consumption are also increased significantly, but by far not as strong as the economic performance.
Since the U.S. as demand for Chinese consumer goods engine for the foreseeable future fails, China’s economy needs a new growth model. China’s government is aware of this problem very well aware. Therefore, efforts were made in Beijing, the economic package to create the domestic consumption going to get. So the package also includes grants for the purchase of TVs, washing machines, refrigerators, mobile phones and motorbikes by the poor rural population and a far-reaching plan to extend social security to the savings rate lower. In addition to the provinces with their own money and grants from the central government to further expand its infrastructure. A portion of these projects is already underway, as reflected in the growing cement production show.
Investment in domestic infrastructure and domestic consumption but also means that China mainly imports from the U.S. and Europe will be little growth. Construction materials are mainly from the domestic, at best, even from Asian neighbors. Given the design of consumption subsidies, only for certain types of household appliances to be paid, probably more the consumption of Chinese production of medium quality are suggested as the purchase of an expensive vehicle, or import high-quality entertainment with a high proportion of imported inputs.
The purchase of high-quality machines, about which China has imported from Germany in order to serve the world, is Beijing’s policy is not stimulated. On the contrary, the Chinese government must avoid even that, in any case with enormous overcapacity equipped export industry is now again new factories are built.
For Europe, and especially the long-standing export champion Germany, but also means the economy must turn to be home. A hope for a boost from Asia is likely futile.