One topic that hasn’t received as much attention as it might is differential economic growth within China. I’ve been perusing the First Quarter 2012 edition of the China Beige Book (http://www.chinabeigebook.com/), which offers a high-fidelity, comprehensive survey of current national, regional, and sectoral economic conditions in China. It is based on original primary source sourced within and throughout the country. What it reveals is some considerable differences in the economic climate between (and within) China’s various regions. Shanghai, Jiangsu, and Zhejiang, for example, have experienced strong revenue growth this quarter as autos and IT have been doing well, but Shanghai also has the most firms with falling output. In the northeast, by contrast, manufacturing is plodding, hurt by sluggish textile and capital goods demand, but many domestic and foreign companies are still investing. In China’s central region, growth is disappointing and manufacturing results are lackluster, but the region is attracting an impressive set of local and foreign firms seeking untapped markets and cheap local labor. Farmers are hopeful but worried about drought.
Such regional differences have heretofore taken a back seat to high levels of economic growth. One wonders if they will feature more prominently in decision making as Chinese economic growth slows.