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 The global recession started
with housing market crash in the United States in 2007 has rapidly spread to the world. The
extent and intensity of this episode of global economic down turn is unprecedented. The crisis is escalating. Market condition is still worsening. Job
market is still weakening. Productivities are still declining. Governments
of the western countries are struggling to find ways to
end this catastrophic crisis. Unfortunately, none seems to have seen
any substantially promising results.
Nevertheless, there is a silver lining in this globalized meltdown. A
series of indicators have shown China's economy is reaching its bottom.
As the matter of fact, China becomes the only economy in the world to see significant
growth in credit to corporate and household sectors since September
2008.
Why China is so resistant to such a severe global recession considering a large
portion of its economy once was heavily relying on exportations that are
now suffering steady shrinking?
Of course, there are many factors that might have contributed to the resistance. But the
most important contributors should include its social structure, political
system and market dynamics. All these factors are
inter-correlated.
Social Structure
In article "Real Causes For US Financial Meltdown and Global Recession", I
suggested that the rooted cause for this episode of recession, and most
likely for the great depression, is the extreme inequity developed
during the
rapid economic expansions in the United States.
The social structure in China can just avoid real inequality, an
"invisible hand" in the capital market. It is conceivable that inequality is growing in China in recent years, which
could potentially
expose Chinese economy to certain risks in the future,
nevertheless at the current stage, its inequality hasn't reached a level
that is even worth concerning. China has a socialist economy. Although free market
mechanism had been brought into the country in the process of opening up and reform, the government has never given up its
absolute control and
ownership over far exceeding 50% of the total assets in the country.
On the other hand, media is an important element in the social progression of
the modern age. It is a undoubted fact that in China the media is
in large maneuvered by the central government and is lack of
transparency. This great social disadvantage in the civilized world
nevertheless may have to certain extent played a positive role in
economy during this global recession. There is a classic philosophical
saying, "bad things can turn into good things under certain
circumstances". That government controls media may well be one of them.
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