All hail the Chinese worker: industrious, risk-averse and keen on saving cash rather than spending it. Although the country’s housing market is slowing, we have yet to see US-style mass defaults on mortgages by people who shouldn’t have been given such generous lines of credit in the first place. Neither – and perhaps more importantly – have investment banks leveraged these mortgages several times over to raise more funds. As such, China Construction Bank is pushing ahead with plans for the country’s first sale of commercial mortgage-backed securities while people who try and peddle similar products in the US risk being mistaken for snake-oil salesmen.
But there are those who are guilty of taking the “reliable Chinese savers” idea a step too far. Zhou Daojiong, a former chairman of the China Securities Regulatory Commission, believes household savings could rejuvenate the struggling domestic stock markets. Why, Mr Zhou, would a risk-averse Chinese consumer sink his savings into the casino that is the Shanghai Stock Exchange when all around him are stories of others getting burned?
Elsewhere there is more evidence of the hatches being battened down to weather the economic slowdown, with mergers in the steel industry and potential state-led job creation in the engineering industry (building aircraft engines). And if people can’t find work in the factories, they can always turn to the roads. The Transport Ministry has said it will boost spending on infrastructure by a further US$292.9 billion over the next three to five years.