Hurrah! No need to worry — China surges?

There we are then! We needn’t have panicked over the past few weeks about China’s apparent economic hiatus. We are told this morning that The People’s Bank of China have now done the decent thing, lowered interest rates (which we can’t do in the West) and global markets can surge again.

Or will they?  Is there still a rapidly growing world market for the consumer goods that China makes so well and exports so cheaply?  In the last two years or so, did the market start declining of its own accord causing China to think about becoming a more service-type domestic market or did the latter decision cause investment to be withdrawn from export production?

We don’t know yet, nor will we know for sure for some weeks or months.  However, if the export levels of some two years ago don’t recover quickly, then the concept of incessant economic growth as assumed by most economists is as dead as the Dodo.  Economists will have to get used to the idea that the world trading system is itself self-limiting and is on its way to ‘least effort’ which is common to all physical systems.

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