On Account of the Economy

I've been asked several times by those back in the States if it feels that China's economy is slowing down. My response is still that I have no anecdotal evidence from daily life here that the economic situation is deteriorating. In fact, quite the opposite; I see many signs that the average Chinese, at least in Beijing, are not concerned about a slow down at all. A friend is going out to buy a car this weekend. The owner of the apartment next door to us is completely gutting the place and renovating. Sometimes when I'm leaving our apartment in the morning I get a peek of the progress inside the door and it looks quite nice. It appears someone else in the neighborhood a few doors down is also renovating, from the new stack of supplies I see outside their entrance every morning.

Still, Wen Jiabao issued a statement last week that this could be "the worst in recent years for [China's] economic development," according to a recent New York Times article. The article also quoted several economists following the situation, and they all sound very bearish.

However, the article mostly focused on evidence from southern China, the country's main exporting region. After the burst of the 2001 tech bubble, cities like San Francisco felt a much more severe economic pain than the rest of the country. I wonder if in a country of 1.3 billion people, it's possible to have regional recessions that are even more isolated and separated. You've also got to realize that the slowdown these economists are predicting will still mean a whopping 5-6% annual GDP growth. To the naked eye will that even seem like a slowdown? I have no idea.

I am astounded, though, by the number of high-end commercial construction projects you can see by standing in just one spot here in Beijing. Ben -- and his superior JLL real estate insight -- says that projects are tripping over themselves to line up retailers like Gucci and Prada in order to establish themselves as a premier shopping location. There are only so many $8,000 man-purses a guy can buy for himself. This does not seem sustainable.