If we consider that domestic demand has risen, and international trade between southern countries has increased a lot, then the idea of a real “delinking” between developing and northern countries has emerged. Indeed, we can think that emerging countries, in Asia and more particularly its natural driving force – China – are protected from international turbulences.

It is true that China has a lot of assets in comparison with other emerging countries:

-The main state-owned financial institutions are deposit banks, which contrary to their occidental counterparts, are not obliged to use the monetary market (loans account for only 65% of their deposits)

-Chinese people are the “saving kings” and their debt only represents 13 percents of the GDP, while it is 100% in the US!

-The rules for mortgage loans in China are much more drastic than in some occidental countries.

-As a great exporter, China has a lot of cash, the same cash that western countries are lacking.

The trade globalisation ties economies together, and China has become dependent with other nations too:

-Wishing to re-invest its “war treasury” the best, China has massively invested abroad, by the means of its national funds and the CIC (China Investment Corporation). For example, Chinese investors own 10% of Blackstone's capital. Moreover, China is the 3rd world owner of American Treasury Bills

-China's growth mainly comes from exports as we said (“the World's Factory”). Every drop in the demand on behalf of China's foreign partners, and more particularly the US and Europe, is strongly felt by Chinese companies.

-These effects are important in the Toy and Textile industries, branches which have already suffered the disappearing of many local companies. Anticipating slowdowns, 4 iron makers in Northern China agreed to lower their production by 20%.

-n the same time, we have to notice that the emerging countries, on which some Chinese decision-makers would like to focus, will hardly compensate the drop in US and European' imports.

Conscious of its assets but also of its commercial dependence, China bets on a euros 450 billion boosting plan! After an amazing 12% growth rate in 2007, gone down to 10.4 % in the first semester of 2008 mostly because of the temporary production cuts during the Beijing Olympic Games, China slowly slides towards 9 % for 2008. While exports are collapsing, the government's purpose is to boost domestic economy. Indeed the Chinese consumption only accounts for 38% of the GDP. The plan encompasses the following measures:

-Invest RMB 4 000 billion (7% of the GDP until 2010),

-Increase loans for small and medium companies,

-Invest RMB 100 Billion more in the construction branch,

-Improve the transport networks (highways, airports, railroads...),

-Develop country facilities,

-Focus on Environment protection,

-Facilitate transactions in real estate,

-Etc.

China is far less in danger than some other occidental economies. Thanks to the massive amounts of money the country has collected from its exports, China is focusing on its own domestic economy boosting the national demand, which has a lot of potential for growth. Socially speaking there are fears of course, as China cannot afford to see its growth decrease under 8%. Can't we say that, implicitly, this new boosting plan offers opportunities to French companies which plan to enjoy this gigantic Chinese domestic market? Can we?

Pierre Dhomps 

ENERGIE 7 INTERNATIONAL - 69 rue Edouard Colonne - 92000 NANTERRE - FRANCE

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