The Times Online reports:
Bankruptcies, unemployment and social unrest are spreading more widely in China than officially reported, according to independent research that paints an ominous picture for the world economy.
The research was conducted for The Sunday Times over the last two months in three provinces vital to Chinese trade – Guangdong, Zhejiang and Jiangsu. It found that the global economic crisis has scythed through exports and set off dozens of protests that are never mentioned by the state media.
Now, I’m taking that with a grain of salt – not because I particularly doubt the sources in the article, but because I’ve found that it’s so much “news” about China is passed through filters that result in the China that writers and reporters think you should see, instead of the China that is. That said (and here is where my own filter kicks in), if things really are moving towards massive unrest in China, I think that’ll hit Western consumers just as hard as the financial mess. All those cheaper places people have started shopping at, lately? Direct pipeline of goods from China. And when that pipeline gets interrupted by unrest? Where are these stores going to turn? As best I can tell, they don’t have any other meaningful options.
tx2vadem
I read that China needs to maintain a 9% growth rate to employee all of the people who enter their workforce every year (found the link: http://economistonline.blogspot.com/2008/12/decipher-chinas-unemployment-rate.html). I imagine high unemployment is going to create a big problem for them. Even more so if the only reason people were pleased with the central government was due to economic growth. And then if real unemployment is much higher than government stats, then they are in for a bumpy ride (time for another Cultural Revolution?).
I think you are right on the impact to us. There may be diversity in vendors when it comes to supply chains. But if Wal-Mart forced all of their vendors to source from China, then despite the diversity of providers they all point back to the same source. At the very minimum, may be this will force companies to better assess concentration and political risk. I don’t have high hopes though. The system is so heavily weighted towards short term performance.