The rejuvenating effects of Beijing’s stimulus plan appear to be faultlessly synchronized with the weather. As Chinese foliage warms and blossoms, so too, it appears, do its statistical indicators. Once a nest of pessimism and gloom, economic forecasting departments have emerged to perform pastoral dances over prospects that Beijing’s 8% GDP growth target might not be so far off the mark as once suspected. It’s hardly surprising that the People’s Bank of China is sticking by 8%, but foreign analysts are starting to buy in. Goldman Sachs, for example, is euphoric over recent economic indicators, revising its 6% forecast up to a whopping 8.3%. Even the most pessimistic of the lot, Royal Bank of Scotland, is now predicting 7% growth, up from 5%. Huawei, China’s networking giant, is also frolicking in the green fields of profitability. Ignoring the global telecommunications equipment industry’s general decline, Huawei went ahead to post a 20% increase in profit in 2008, even after taking a US$776 million bite from currency fluctuations.
But spring is a season, and in much of China, it’s a short one. The new catchphrase of cynics and skeptics is “sustainability.” Fan Jianping, chief economist at the State Information Council, believes that GDP growth will be compromised by remaining overcapacity. Analysts wonder if Huawei, which makes 75% of its revenues abroad, could be exposed to delayed effects of the slump in the developing markets in which it has enjoyed so much success. And there’s a demographic cloud on the (distant) horizon: China is also producing too many old people. A report issued by the US-based Center for Strategic and International Studies says that by 2050, there will be just 1.6 working-age adults to support their parents and grandparents. This statistic does not separate out working-age yet unemployed traditional Chinese wives. Barring the implementation of a comprehensive national pension scheme, traditional husbands will be financially supporting both branches of the family – what Chinese people call the 1-4-8 problem – not to mention their own child(ren).
