Dear China - It Aint Over Yet !

On this last day of the year 2011 it seems appropriate to write this blog

David Nealis in Shanghai

Dear Nation of China,

  Welcome to the world of (almost) free markets, your rapid double digit growth might be slowing now, but that doesn’t mean in the decades to come you will not see it again.

I say these things because I keep hearing very pessimistic statements coming out of China and I believe this is just the beginning of their long journey into a free market economy

Speaking at a briefing in mid December Yu Bin , Director General of the Department of Macroeconomics Research at the State Council’s Development Research Center said the days of double digit growth were “ Gone Forever"

Yu suggested that the government should increase “inflation tolerance” to provide more flexibility for further economic reform, the readjustment of China’s growth model and the liberalization of controlled prices for some resources. Yu stated that rising labor costs, state monopolies, asset bubbles, and rising commodity prices as the reasons behind long term inflation.

And in the short term I believe he is right, but China is a nation filled with very entrepreneurial people and their journey into the free markets has just begun.

Best Regards,

David Nealis