China skids

Link via Marginal revolution...

Exports constitute nearly 40 percent of China's GDP--far too high a figure. (By comparison, in the U.S., exports account for about 10 percent of GDP most years.) And the global financial slowdown is already taking a terrible toll. Some 10,000 factories in southern China's Pearl River Delta area had closed by the summer of 2008. Gordon Chang, a leading China analyst, estimates that 20,000 more will shutter by the end of this year. In the third quarter of 2008, Beijing also reported its fifth consecutive quarterly drop in growth, and several private research firms expect a sharper slowdown next year. Additionally, unemployment is skyrocketing; in Wenzhou, one of the main exporting cities, about 20 percent of workers have lost their jobs, Reuters recently reported.

This was inevitable in many ways I guess. When demand goes down, suppliers are bound to be hit. But the next question.

What about India? The FM has warned not to use the R word, so I will use the word recession. One thought is that India will ride out the storm - though I am less sanguine about us emerging completely unscathed. Politicians are living in denial (they need to do so only till the election).

But Niranjan has a good thought over at Mint: Seek happiness in recession...

What they are telling us is that a few years of modest salary hikes or a missed promotion is not really that much of a calamity. I am not sure the world is ready for a lotus-eaters’ paradise right now. But the very idea that there are other things you can do with your life in a stagnant economy—or even a slowing one—is a therapeutic thought.

We already see some of this in the reports of young professionals taking a break from the insanities of corporate life to work with non-governmental organizations. More of that could happen, as corporate animals slow and seek clarity in life.