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Wednesday, January 26, 2005

Chinese economy grows rapidly

How fast is fast? I believe 9.5% growth is "pretty" fast for an economy.

Despite the curbs that the Chinese government applied to cool down the economy, its ongoing success cannot be denied.

There were major economic and political developments in 2004 that show that China cannot be underestimated. It surely is not the currency that causes problems for the continuously declining US-dollar, or the stagnant and recessionary European economy.

When do politicians (and some business leaders, however, they tend to get it earlier) elsewhere wake up and realise that in order to compete with China, one needs to develop clear strategies and not close doors, increase taxes, initiating accusations of dumping and so on. Instead, one needs to engage China with broader or more specific trade pacts (however good or bad they might be in the long run) or compete against it by upgrading ones own economy or integrating the rise into ones own business model. Because if one is not doing this, China's economic power might just overroll it. And if giants talk, they might just start to dance. I am talking about the recent and ongoing talks between China and India, two emerging, and complimentary powerhouses.

Surely, there are risks. Bubbles across the economy might lead to industry gluts, or over supply and a meltdown would be dramatic. However, the Chinese leader so far have managed well over the last two decades in terms of controlling and managing the economy by opening it up in a careful manner. Sure, there were and are hickups - smaller and bigger ones, but overall, there is a positive outlook on China.

(By Asia Business Consulting)