Better Living through Software

This looks far worse than anyone imagined.  Power output in China dropped 4% since last year.  Power consumption in China is the best indicator of economic growth, so this implies that the Chinese economy is actually shrinking.

The Chinese economy was supposed to grow 18% this year, and Chinese society absolutely depends on economic growth to absorb 25 million new workers each year and provide stability.  The growth predictions had just been reduced to 6%, which made most economists very nervous.  A growth rate below 6% would essentially be a crash landing for the Chinese economy, and could result in all sorts of social pressure and unrest.

Already the central government was considering massive spending measures, such as reinstituting universal health care, to soften the blow of a 6% “crash landing”.  It’s hard to imagine any stimulus package that can prevent carnage with a 4% drop, though.  This is going to be very, very ugly.

The irony of all of this is that the Chinese are the least to blame for all of the global financial problems.  Their credit markets have always been strongly regulated and very disciplined, and they forbid the various “creative” derivatives markets that were common in the west.  And they built up a trillion dollars of reserve by being fiscally Spartan.

This entry was posted on Friday, November 14th, 2008 at 10:06 am and is filed under Life at Microsoft. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.