A Big Chinese Cake

As Mr Zhang Yong Qun, general manager of Songjiang Plywood Factory puts it: " The domestic market is a big cake which everyone wants to have a bite of it."

Yes, as China transitions into a more domestic growth fuelled economy, the Chinese cake has gotten bigger. Unfortunately, the number of hungry mouths (companies) wanting a piece of it is ever-growing as export oriented companies turn to the "domestic cake". The scene is similar to that of Oliver Twist... "Please Sir, Can I have more?" And this is best summed up by views expressed by many at the current 20th China Harbin International Economy and Trade Fair.

While the Fair was a success, attracting 25% more booths this year, and reaching over 120,000 exhibitors and buyers from 70 countries, the mood was sombre. Many of the participants that came from the inland provinces talked about the domino effect, as the slowdown moved from the southern provinces to the northern ones. As Mr Zhang Hou (another Zhang), Chairman of the Heilongjiang Province Construction Group, said : " The impact has been delayed by 4-5 months. Business began to drop in February and orders from developed countries have been cancelled."

"Like the winds, the crisis landed first on the Yangtze and Pearl river delta, but has blown across the nation", was another metaphor used to describe the current inland sentiment.

So what is the real situation out there? Official Chinese data shows loan growth accelerating and automotive sales recovering strongly. The stellar stock market performance of the past few months is certainly suggesting the worst is behind us. For me, I think the worst is over and there are signs of green shoots in the Chinese economy. But being such a vast nation, a couple of green shoots doesn't say much, unless you are skilled enough to spot those green shoots. Hence, for most of us, it will be a bumpy 2009 even in China... and if you spotted a "green shoot", stick to it but don't try pulling them to help them grow... they'll die on you....Patience needed.