Global Financial Crisis (GFC) is real in China

January 13th, 2009

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In our previous article, Visit to Shanghai- observations, we promised to reveal more about the insights on the Chinese economy from the conversations we have with the locals in Shanghai.

In all the meaningful conversations we had with the locals, we were asked whether Australia is affected by the Global Financial Crisis (GFC). Those people whom we talked to are just normal everyday folks across different walks of life. Chinese President, Hu Jintao, in his new year speech, mentioned about the challenge China faces with the GFC. The local newspaper talked about the Great Depression of the 1930s. Indeed, there are real concerns about the GFC among the Chinese people.

There are anecdotal evidences that the GFC is hitting the real economy in China. We learnt that freshly graduated university graduates in China are having trouble finding jobs. Although the government is encouraging them to start business enterprises, we doubt many can make it through successfully without any experience. One career woman even had to put her ambitious career plans on hold due to the GFC. Another expressed her opinion that this GFC is not one that can be over in just a few years- i.e. it is so serious that it can drag on for much longer than that.

Although the GFC is hitting the Chinese economy hard, we could feel from the streets that economic activity was still much ‘hotter’ than Australia. The reason is because of the sheer size of the population in China. We were told that the number of registered residents of Shanghai is 17 million. We guess if you include the unregistered residents, the population of Shanghai could easily exceed 20 million. Imagine cramming the entire population of Australia into one city! Thus, the colossal size of the population in China means that there will always be colossal amount of economic activity relative to tiny countries like Australia. On the flip, this means that any problems will be colossal as well.

The most interesting conversation we had was with a retiree. The question was, will China succeed in navigating its way out of this economic crisis? That retiree had his own opinion which he reckoned many foreigners have yet to fully appreciate. This insight will require another piece of article. So, keep in tune for the next one!

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