Economic war footing

Constant theorising notwithstanding, at the moment no one has a clear understanding of when the current global economic meltdown will pass, or what the landscape will look like when it is done. One survey of economists, released by the Wall Street Journal during the first week of April, suggests that the US recession will end in September. As for the rest of the world, who knows? But there is also looming apprehension for the period beyond this timeframe, that the end result could be a situation worse than the Great Depression of the 1930s. Already there are clear signs of this, with manufacturing sectors around the globe collapsing, spectres of protectionism reappearing, layoffs becoming rampant, economic nationalism re-emerging, and social tensions and instabilities adding to the mix. In this part of the world, China and India, the two giants, despite showing some resilience, have suffered tremendously.

In India, there were 670,000 job losses in 2008-09 compared to 970,000 jobs generated the previous year. With the informal sector unaccounted for, some suggest that the actual number could be as high as two million jobs lost. China, with its economy much more integrated with the global market in terms of trade, technology transfer, investment and even economic assistance, has found itself doubly vulnerable. The ongoing recession has affected China in three major ways. First, its exports have sunk, with the demand for Chinese goods in the international market having decreased dramatically. As a result, factories are closing down and construction activities have slowed considerably. Places such as Xinji, in northern Hebei province, famous for textile and leather exports, grew by more than 13 percent in 2007; today, it is striving to maintain half that rate. Second, there has been a steady withdrawal of foreign investment further affecting economic activity. According to figures released in mid-April, at just over six percent the growth rate in China has now hit its lowest point since 1992.