China’s Economy Is Back, While U.S. Still Ails
Just eight months ago, thousands of Chinese workers rioted outside factories closed by the global downturn.
Now many of those plants have been reopened and are hiring again. Some executives are even struggling to find enough temporary staff to fill Christmas orders.
The image of laid-off workers here returning to jobs stands in sharp contrast to the United States, where even as the economy shows signs of improvement, the unemployment rate continues to march toward double digits.
The Chinese government says unemployment is falling, and even the hardest-hit factories – those depending on exports to the United States and Europe – are starting to rehire workers. No one here is talking about a jobless recovery.
Even the real estate market is picking up. For instance, in this industrial town 90 miles from Shanghai, prospective investors lined up one recent Saturday to buy apartments in the still-unfinished Rose Avenue complex. Many of them slept outside the sales office all night.
“The whole country’s economy is back on track,” said Shi Yingyi, a 34-year-old housewife who joined the throng. “I feel more confident now.”
The confidence stems from China’s three-pronged effort – a combination of stimulus, liberal bank lending and broad government support for exports.
In the second quarter, the Chinese government said its economy surged at an annualized rate of 15 percent. The U.S. economy shrank at an annual rate of 1 percent in that period.
“So often China and the U.S. are mixed together as being in the same situation, and that is totally wrong,” said Xu Xiaonian, an economist in Beijing with the China Europe International Business School.
That does not mean the two nations are not connected, of course. Many economists say China cannot continue to grow unless the U.S. economy picks up. China needs the United States to buy its goods, and the United States needs China to continue to buy its debt. This mutual dependence is seen as one reason neither country can afford the current dispute over Chinese tires and American chicken and auto parts to grow into a trade war.
With a planned economy, China has been able to disburse its stimulus much faster, turning it into new rail lines and highways.
China’s Finance Ministry announced in late June that half the $173 billion in central government spending had already been allocated to specific projects. The White House said in early July that a quarter of the spending authority and tax cuts in the $789 billion American stimulus had been allocated or used.
But even more of an impetus to China’s recovery, economists say, are two other government efforts that are paying big dividends: looser lending and export supports.
The state-controlled banking system here – which breezed through the global financial crisis with minimal losses as U.S. financial institutions reeled – unleashed $1.2 trillion in extra lending to Chinese consumers and businesses in the first seven months of this year. That money is financing everything from a boom in car sales, up 82 percent in August from a year earlier, to frenzied factory construction.