Article by James Fallows on the economy of China

James Fallows has been writing for the Atlantic magazine for years. He is currently stationed in China. His recently article on the April 2009 issue discussed about the economy of China. He thinks China will walk out the recession probably in Apr 2009.

China's way forward

James first described the current economic condition in China: idle factories, moored container ships, high umemployment rates,etc.

He then went on to interpret the current problem citing the work by Michael Pettis. Michael offers a very unique thought on where the current recession came from and where it will lead the world economy to. I personally do not agree with Michael's opinion in that he says trade surplus is the cleanest overcapacity.

The most interesting conclusion of the article is: "China will use tough times to design innovative products that will get it the high profits and the high-value jobs Americans kept to themselves for decades ". This is a strong indication that China as a huge company will begin to climb up in the value chain of world economy. This echoes what most economists say in China: "a second industrial upgrade" since 1980s.

That means more merger and acquisitions between China and the USA.

Post by Huiting Zhuang of Crebbers LLC