And if China choking This question, even unthinkable recently, came to the fore in recent weeks, as evidenced by the nervousness of the Shanghai Stock Exchange. It has been a fall of more than 12 percent since its peak in mid-April. Several statistics came to prove that the slowdown in the Chinese economy was no longer a hypothesis, but a reality. In its fight against inflation, the Central Bank based on the brake pedal to limit credit, as she comes to the day before yesterday still noting once again the rate of mandatory reserves of banks. Which eventually affect the morale of investors... and on industrial production. Although the growth of the latter remains solid, it is the lowest for nine months. All economists revise downward their economic prospects. There is certainly a form of overreaction on the part of markets, because a sudden collapse hypothesis appears very likely. But it seems increasingly clear that the speed of development of the Middle Kingdom is to reduce.
The list of pitfalls to avoid goes. This is several quarters that inflation is installed in the landscape and it concerned about Beijing. Tuesday, it was reported that it had reached 5.5 in may, a record thirty-four months, and every reason to think that the figure for June will be worse still. But now, sectoral issues are added to this table. At the forefront of which figure the automobile. Driven by subsidies on the less greedy models fuel, it has grown, these past two years, dizzying: vehicle sales increased yet a third year last, reaching 18 million units, a new world record. But the era of subsidies is complete and the return to normalcy could be painful. Market is in net decline, global rush to China. May be case-sensitive. Beijing fears over-investment and gives out its permissions for new settlements of plant. Another area important for the industry and that today is the diet: the rail. After years of sheer scale in high-speed lines, the authorities are trying to put order in the Ministry of railways, extremely indebted. The slowdown is indisputable.
These two examples show the same trend. After have been doped with steroids, as part of a massive stimulus plan almost helped the country to pass in between the drops of the global financial crisis, China's economy falls on Earth. Some had thought structural growth of more than 10 last year; It is now known as cyclical.
Or, if it is a sector in which the end of the recovery plan is more blatant than elsewhere - and more painful UI ' is the banking system. Here, the situation is even more dangerous, because of inflation, Beijing is forced to move from one extreme to the other. Two years ago, any application for credit was posted in time; Currently, the Chinese press tells the daily life of SMEs taken by the throat in a world where the cash is withdrawn. After having raised interest rates four times, and nine times the rate of reserve requirements of banks, the Chinese Central Bank reached an unsatisfactory result. Because large State enterprises, never far from the power, continue to have access to credit, although slightly more expensive. And private companies who rap. "The black" credit market explodes: rejected by banks, they turn to private lenders, practising rates often above 50, or lend between them. Bankruptcy of one of them, this is a risk of chain reaction recently singled out by the French credit insurer Coface.
Yield to the catastrophism of course would be a mistake, because the huge Chinese household savings plays has long been an invisible financing of the economy. But if family self-help can be sufficient to open a restaurant or a small shop, what midsize companies You touch there a financial system still deeply monolithic and State limits, designed initially as a transmission belt between the decision of Beijing and the life of major Chinese groups. If this mode of operation had proved a formidable efficiency in the recovery plan, they rediscovered today as he leads rarely on a resource allocation based on rational criteria of creditworthiness of the borrower or strength of the project. Which leads to distortions of market: major groups pay cash at an abnormally low price, at the risk of over-invest, while small prices too high. However, at the same time, the latter face soaring labor costs, at the discretion of the price of electricity, consequence of coal, and the rise of the yuan, which penalizes their export competitiveness.
It seems clear that the most vulnerable businesses will not survive. Is also not necessarily a bad thing for a country seeking to range and, therefore, to get rid of its very low value-added industries. But, to borrow the vocabulary of economic theory, all destruction are not necessarily "creative." To allow the most promising companies to innovate and develop, China will have to make his financial revolution so that the currency resource is used in the best. It was always a long-term prospect. But, today, at the time where it is more enough to press the button "production" that developed markets absorbing Chinese exports, this becomes an imperative.