STOCK MARKET WATCH -- Wednesday, 6 March 2013

[Ghost Dog]

12. China: Devil in details of grand urban plan

BEIJING - Few doubt that growth in China's economy will grind to a halt in the next few years. Many believe there will be a significant slowdown from the double-digit development of the past three decades. Premier Wen Jiabao in his last speech at the opening session of the National People’s Congress on Sunday announced a 7.5% target for 2013. But the major concerns are about the third decade of the century, when China's gross domestic product could overtake American GDP. Then, many believe China’s economy could fall into some form of stagnation, like that on Japan after the 1980s.

Chinese leaders love to think long-term, and so were trying to address also this issue when planning a gigantic development program of 40 trillion yuan (US$6.4 trillion) for the urbanization of 400 million people in the next 10 years.

Such movement is something unprecedented in human history in terms of the resources and number of people involved. It is something bound to dramatically change China, economically, socially, culturally and also politically, and thus it will have a huge impact on the rest of the world. If China succeeds, the transition will open a fast-track for development during the 2020s. If it fails, the spillover effects from a struggling economy rivaling the US in size will be equally global, and could trigger wider financial and economic crisis.

The mammoth urbanization plan will be concentrated mainly in small and medium cities with less than 2 million residents, with the 40 trillion yuan investment financed by a massive issuance of bonds in the next 10 years, something that will change the financial structure of the country in the longer term. The medium-term goal is to spur China's development by steadily bringing into the cities the 400 million people who now live part of the year, or year-round, in the countryside.

These people will be brought from a rural existence that in some respects resembles the Middle Ages into a present that resembles the science fiction of Blade Runner...

/... http://www.atimes.com/atimes/China/CHIN-02-060313.html

... "A 10 or 20-year program is unthinkable in the West, and that sort of ability to plan appears to provide China with a competitive advantage over the kind of political landscape that in America and Europe is mired in short-term programs driven by the view to elections within a one or two-year timeframe. " ...