GUANGZHOU (AdAgeChina.com) -- With the U.S. and Europe heading into recession, many companies are turning to major emerging markets such as China as a place to sustain sales. Sorry, here are ten reasons why Chinese consumers won't save the West.
1. Slow Growth
China itself was overdue for a major cyclical downturn. GDP growth has fallen below 10% for the first time in more than five years.
2. World Bank Blues
The World Bank revised China's growth downward to 7.5% from an earlier projection of 9.2%
3. Stalled Auto Sector
Auto manufacturers helped build America's middle class nearly a century ago. In China, they have started to do the same thing but the fun was short-lived. This fall, after six years of at least 20% annual growth, Chinese car sales have started to drop.
4. Slow Growth (Part Two)
Property prices in China this fall grew at their slowest pace in more than three years.
5. Trust Issues
Despite the tainted-milk scandal, most Chinese consumers still trust domestic brands more than foreign ones.
6. Slumping Stock Market
By mid-November, China's benchmark stock index, the CSI 300, had slumped 67% this year, making it Asia's worst performer. The Shanghai Stock Exchange has also nose-dived.
7. The 'C' Word
Salaries for the urban middle class will remain stagnant, and their spending will fall as China's Communist party narrows the wealth gap and secures political stability in rural areas with New Deal-like investment projects.
8. Factory Closings
Falling export orders have forced thousands of factories to close in industrial south China, sending hundreds of thousands of workers back to their homes in rural China, with no work and few prospects.
9. Population Pressures
China is under growing tension from its large population, limited resources and environmental problems. Its focus is sustainable development, not a global bailout.
China's government enjoys gloating. After years of western pressure to open up its financial markets, the shoe is on the other foot. At most, China can save itself.
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