Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Propaganda Wall Poster Shanghai China 1982 (Jon Bower China / Alamy/Jon Bower China / Alamy)
Propaganda Wall Poster Shanghai China 1982 (Jon Bower China / Alamy/Jon Bower China / Alamy)

Can China save the world again? Add to ...

In a Carrefour grocery store in Shanghai’s Putuo neighbourhood, there is similar pessimism. Liu Cong, a 48-year-old trader in a brown jacket and loafers, notes that gas prices have crept up over the past several months and that meat – particularly the pork beloved by Chinese – has also become more expensive. A nearby woman interjected repeatedly with approval as Mr. Liu voiced his frustration.

“If the price suddenly doubled, it would be easier to avoid certain things, but the prices have risen so slowly and that is what’s really horrible,” he says, adding that none of the price increases have flowed to China’s poor rural farmers, only to logistics companies and the government. “Finally, inflation has blown up. And the citizens can’t do anything.”

Near the frozen chicken, Pan Man Kung, who moved from Hong Kong three days earlier, points to oranges and peaches in her cart and gripes, “The things here are even more expensive than in Hong Kong.”

But she is optimistic about the Chinese economy, saying it is resilient. Ms. Pan, who has travelled back and forth between Hong Kong and Shanghai for years because her son works here, notes that rising incomes have meant that many mainland Chinese are now shopping in Hong Kong. At the same time, Hong Kong natives are crossing the border to try to find bargains in the fake stores of Shenzhen. “When I take the train, the Chinese have four or five bags, and I think, ‘Oh no, the Chinese are richer than us, now,’ ” she says with disbelief.

Not all Chinese, of course, are rich. Per capita GDP is roughly a 10th of that in North America. That’s part of the problem. But Alexandre Dam thinks it may be part of the solution. Mr. Dam, a project manager at SCR Global who helps French garment and clothing companies manage their supply chains in China, has recently begun to lay the groundwork for launching retail outlets for French chains outside of the major cities, in China’s interior. “Second-tier cities are a good place for mid-level Western brands,” Mr. Dam says. “The demand is blowing up in the second- and third-tier cities. And for sure, the Chinese economy will be supported.”

Indeed, China’s plan to develop infrastructure and promote more urbanization in the country’s second- and third-tier cities will sustain strong economic growth and commodity demand from Western countries like Canada for years to come, according to analysts Andrew Keen, Thorsten Zimmermann and Lourina Pretorius at HSBC.

“In terms of long-term structural trends, demand is now driven by an urbanization process that is far more structural than consensus generally believes,” the analysts said in a recent report. “On our analysis, China is only 20 to 25 per cent along the path towards being a mature materials market and it may take at least six to nine years before demand intensity peaks.”

Resource company executives are making the same bet.

As Canadian resources stocks tumbled again Friday, Don Lindsay, the CEO of Teck Resources, Canada’s largest base metals producer, outright dismissed the market turmoil and suggested that China would once again save the day for the resource sector.

Mr. Lindsay said commodity producers such as Teck used to depend on the U.S. and Europe. “While the market still hangs on that belief, I can assure you it’s no longer true,” he said, rattling off a list of China statistics, from its huge copper demand to rapid urbanization. Teck’s sales staff is currently working on fourth-quarter contracts and prices, and “we haven’t seen anything unusual” suggesting a change in demand, he said.

Sales of B.C. lumber to mainland China have been surging for several years, on pace to exceed $1-billion this year for the first time. But after a boom earlier this year, the latest statistics show the pace of growth slowing significantly. Still, foresters remain confident China’s long-term growth will keep sales strong.

“They have a very aggressive five-year plan,” said Hank Ketcham, chief executive officer of West Fraser Timber.

“You know there's going to be a lot of construction.”

Report Typo/Error
Single page

Follow us on Twitter: @davidebner, @iamandyhoffman



Next story




Most popular videos »

More from The Globe and Mail

Most popular