The world will feel China's economic pain
Telegraph View
By opening its society to market forces three decades ago, China entered an era of rapid economic growth with no precedent in human history. When Deng Xiaoping began the reforms he called "socialism with Chinese characteristics", he aimed to quadruple the size of his nation's economy by the turn of the millennium. This goal was handsomely achieved and the consequences may yet be epoch-making. But the cold vice of global recession now holds even China in its grip.
The latest figures show that China's juggernaut is slowing down and perhaps even grinding to a halt. Its economy expanded by 6.8 per cent last year, compared with 13 per cent in 2007. For those of us enduring outright recession, possessing an economy that grew at all, let alone by nearly 7 per cent, hardly seems a cause for alarm. But China's vast population of 1.2 billion ensures that tens of millions of people enter the workforce every year, while colossal numbers migrate from the impoverished countryside to the cities of the eastern seaboard. Providing these rootless masses with jobs and homes means that China must run simply to stand still. In effect, a growth rate of 6.8 per cent leaves China perilously close to outright recession.
Other indicators suggest this extraordinary juncture may already have arrived. Electricity output in the final quarter of last year was 6 per cent lower than in the same period of 2007. Previously, power generation had expanded by an annual average of 15 per cent. Like the rest of us, China is suffering from a collapse of consumer demand in its key export markets and the crisis of global finance. If its breakneck expansion comes to a juddering halt, the possible consequences could scarcely be of greater moment. Within China, stability and national unity under the Communist Party's iron rule rest upon economic success. Mass unemployment and poverty might eventually threaten this political compact. Economic failure would risk upheaval on an extraordinary scale – a spectre that haunts China's leaders who bitterly remember two centuries of turmoil before the onset of Mr Deng's reforms in 1979.
Our own plight would be immeasurably worsened by a recession in China. With unconscious irony, David Miliband, the Foreign Secretary, chose yesterday to launch a new document on Britain's relations with China, based on the assumption that Asia's giant will continue to be a "motor" for the global economy. If that engine falters, all of us will suffer. Much has been written about the alleged dangers of China's rise. They are as nothing compared with the consequences of China's possible decline.
By opening its society to market forces three decades ago, China entered an era of rapid economic growth with no precedent in human history. When Deng Xiaoping began the reforms he called "socialism with Chinese characteristics", he aimed to quadruple the size of his nation's economy by the turn of the millennium. This goal was handsomely achieved and the consequences may yet be epoch-making. But the cold vice of global recession now holds even China in its grip.
The latest figures show that China's juggernaut is slowing down and perhaps even grinding to a halt. Its economy expanded by 6.8 per cent last year, compared with 13 per cent in 2007. For those of us enduring outright recession, possessing an economy that grew at all, let alone by nearly 7 per cent, hardly seems a cause for alarm. But China's vast population of 1.2 billion ensures that tens of millions of people enter the workforce every year, while colossal numbers migrate from the impoverished countryside to the cities of the eastern seaboard. Providing these rootless masses with jobs and homes means that China must run simply to stand still. In effect, a growth rate of 6.8 per cent leaves China perilously close to outright recession.
Other indicators suggest this extraordinary juncture may already have arrived. Electricity output in the final quarter of last year was 6 per cent lower than in the same period of 2007. Previously, power generation had expanded by an annual average of 15 per cent. Like the rest of us, China is suffering from a collapse of consumer demand in its key export markets and the crisis of global finance. If its breakneck expansion comes to a juddering halt, the possible consequences could scarcely be of greater moment. Within China, stability and national unity under the Communist Party's iron rule rest upon economic success. Mass unemployment and poverty might eventually threaten this political compact. Economic failure would risk upheaval on an extraordinary scale – a spectre that haunts China's leaders who bitterly remember two centuries of turmoil before the onset of Mr Deng's reforms in 1979.
Our own plight would be immeasurably worsened by a recession in China. With unconscious irony, David Miliband, the Foreign Secretary, chose yesterday to launch a new document on Britain's relations with China, based on the assumption that Asia's giant will continue to be a "motor" for the global economy. If that engine falters, all of us will suffer. Much has been written about the alleged dangers of China's rise. They are as nothing compared with the consequences of China's possible decline.