As said again very clearly by top officials such as Mr. Wen Jiabao earlier in April – “The economy still faces major challenges”. Too early for optimism?
Added Fan Gang, the central bank advisor: “Major Western economies are still in the early stage of recession, which will weigh on Chinese exports, and China is still in the process of reducing inventories and adjusting overcapacity, which may not be completed until 2011. My judgment is, the recession in the global economy will last at least three to four years. We should be able to bottom out within one or two years”.
As happened several times in the past, people fail to pay attention to warnings from top Chinese officials. They proved several times to have a much clearer vision on the world economy.
Yes, the “negative figures in China are becoming less negative”. But many people still don’t realize that the ripple effect has barely started to affect business here.
Further to that, many Chinese economists and alike are becoming gloomy with their favorite savings – the USD. They think the Fed is printing too much money and the budget deficit will bring inflation and depreciation of the USD: “The depreciation of the dollar has become an inevitable historical trend” says one. So, potential losses for China’s foreign currency reserves. Not too clever anyway those people, why did they not diversify more their reserves with other currencies? A bit late now.
Unless the USA really can get back on its feet. But some Americans are not so optimistic – like Craig R. Barrett, chairman of Intel: “We are watching the decline and fall of the United States as an economic power – not hypothetically, but as we speak”. He blames, to a large extend, the “slouching education system”. Oh well, we also complain about that here.