Thursday, April 19, 2007

The economic situation is China is tenuous to say the least. The article below (from Fox News) highlights some of the problems they face.

China's Economy Sizzles, Grows By 11.1 Percent in First Quarter; Some Worried About Inflation

Thursday, April 19, 2007

BEIJING — China's sizzling economy surged 11.1 percent in the first quarter, causing the country's Cabinet to declare Thursday it will take steps to keep the economy from overheating.
The pledge by the
State Council came after the government announced that inflation rose to its highest level in more than two years.
"If this type of fast growth continues, there is the possibility of shifting from fast growth to overheating. There is that risk," Li Xiaochao, spokesman for the
National Bureau of Statistics, told a news conference.
Worries that Chinese authorities would raise interest rates to curb growth in Asia's second-biggest economy prompted regional stock markets to drop sharply. European markets also opened lower.
The consumer price index in March rose 3.3 percent, data showed, above the government's 3 percent target. And fixed-asset investment countrywide grew a robust 23.7 percent during March. (Holy cow!!)
A statement posted on the council's Web site following a meeting chaired by
Premier Wen Jiabao said the government will work to "reduce the country's large trade surplus, limit rapid growth in house prices and maintain basic price stability." ........


This situation further exacerbates the disparities developing within the Chinese economy between the "haves" and the "have-nots". A crash within their system could devastate not only their economy, but would have serious rammifications throughout the world. Let's hope they can handle the balancing act. If the "giant" gets up on the wrong side of the bed, look out!

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