Posted by: Bruce Einhorn on August 12, 2008
The economic news from China right now isn’t great: Factories are hurting, exports are down and the inflation figures are mixed (today’s consumer price inflation figure was an encouragingly moderate 6.3%, but yesterday’s producer price inflation number was alarmingly high at 10%). Investors in Chinese-listed shares have taken a beating, with the Shanghai stock index having collapsed from a high of 6124 last October to just 2430 today. Deterred by rising costs for Chinese labor, some investors are looking elsewhere. For instance, yesterday’s Financial Times reports investors from Europe are shifting their attention to Russia: According to the FT, foreign direct investment from the EU in China was just 1.8 billion euros ($2.7 billion) last year, compared to 6 billion euros in 2006.
Still, amid the short-term gloom abvout the Chinese economy, consulting firm Global Insight says there’s reason to be optimistic. Also in yesterday’s FT is this report about Global Insight predicting China will soon pass the U.S. as the world’s top manufacturing country. Next year China will account for 17% of the world’s manufacturing, compared to 16% for the U.S. Global Insight had earlier predicted the U.S. would retain the top rank till 2013, but the economic downturn in the U.S. has hit manufacturers hard.