ARTICLE: “China’s Economy: Domino or dynamo? China is pretty well placed to cushion a global downturn,” The Economist, 11 October 2008.

ARTICLE: “China Slows, World Feels the Pain: U.S. Government Weighs Stimulus; Chinese Economy Cools Faster as Exports Soften,” by Andrew Batson and Ian Johnson, Wall Street Journal, 21 October 2008.

ARTICLE: “China, An Engine Of Global Growth, Faces A Global Slump: New Strains On Beijing; Strong Economy Vital to West’s Recovery and Communist Rule,” by Jim Yardley and Keith Bradsher, New York Times, 23 October 2008.

China’s most recent quarter reports drop to 9% from previous range of 10-11%, and experts predict a further decline to about 8%, a mark most consider the lower ranger of acceptable growth in China, given everything it’s trying to accomplish.

The culprit is simple enough: decline in U.S. demand. Turns out—as I love to preach—that supply isn’t exactly king-making power in the global economy, demand is.

What do we now define as China’s real and much-needed power in the global economy? Its ability to drive some domestic demand in light of recessionary downturns in both Europe and the U.S. So the focus now is on how Beijing might stimulate domestic demand “in a nation known for high savings rates.”

Time to use that $1.9 T in reserves.

Although China’s banks are overwhelmingly domestically focused, the local stock markets lose 65%. Back when the Asian Flu hit in 97-98, the CCP responded with a huge gov spending spree over 98-00. We should expect to see that occur again.

But since China’s already spent a lot on infrastructure, it’s getting harder to find good projects to spend on, so claims the article.

Hmmm. Morgan Stanley predicted China would spend $8T on infrastructure over the next decade. I would assume the complaint here is about trying to find more to spend.

Time to start sending more credit card offers in the mail, me thinks.

Still, hard to ask China to do too much more. It already accounts for 1/3 of global GDP growth nowadays. There are sheer limits to growth.

One area to improve? China needs to make home ownership easier. You have to put down 20-30% in China, despite a declining ratio of house prices to average incomes over the past decade.

Lighten up, baby! Because nothing credentializes the regime like home ownership. People with stuff to protect like their government more.