❗Let's close the gap: We still need your help to raise $40,000 by April 1. Donate now
Fallout: The Financial Crisis

The factory lights are on in China

Scott Tong Mar 4, 2009
HTML EMBED:
COPY
Fallout: The Financial Crisis

The factory lights are on in China

Scott Tong Mar 4, 2009
HTML EMBED:
COPY

TEXT OF INTERVIEW

Bill Radke: As I mentioned, there was a little optimism in the markets shining from across the Pacific today. Asian markets were up, led by China’s Shanghai Composite Index, which zoomed up more than 6 percent.

Marketplace’s Scott Tong is with us now from Shanghai. Scott, why all the investor confidence?

Scott Tong: A couple reasons today, Bill. Number one, we had some data that’s suggesting that China’s factories are kind of coming back to life. The exports are falling off a cliff here in China, and these new numbers suggest that the orders are starting to come back, that factory output is starting to turn around. So maybe a sign that China’s bottoming out a little bit. The other news out of China is there are rumors that China’s great big economic stimulus package is going to get even bigger. They may super-size this stimulus package, which already is more than $500 billion big.

Radke: So is there an experts’ consensus? Is this a real recovery or irrational exuberance?

Tong: You can find a hundred economists on either side of that, I think. On the optimistic side, you have this data and some data about power use, that people are turning lights back on and factories back on, that there’s starting to be a little bit of life here in manufacturing side of China’s economy. On the other hand, the big question is, what’s happening to the rest of the world? If the rest of the world falls off a cliff — Japan looks like that’s happening, we know what’s happening in North America and Europe — than all bets are off for what’s happening here in China.

Radke: OK, and if China’s economy does firm up a bit, what could that mean for the rest of us?

Tong: Well, it could mean a little bit. Frankly, China is too small to save the world, all the economists agree on that. It just doesn’t have the rich shoppers that Europe and North America have. What it could do is bring back the commodities markets a little bit, and bring some confidence to those markets. If China indeed starts to buy more iron ore to make steel, to make more cement, to buy more copper, to make wire to put inside all of the new buildings and things that China’s going to be building with this stimulus package, then the commodities markets, raw materials markets, could start to come back a little bit. That’s what we’ll look for if we’re optimistic later this spring.

Radke: Marketplace’s Scott Tong in Shanghai. Thank you.

Tong: All right Bill, you’re welcome.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.