Word: sectoral
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...those in the tourism industry, discussing restrictions simply doesn't fly. The world travel sector is already experiencing its first contraction since 2003, when the outbreak of SARS in Asia decimated tourism revenues. Michael O'Leary, chief executive of discount airline RyanAir, drew criticism on Tuesday for publicly suggesting that only the world's poorest people will succumb to swine flu, despite the fact that two middle-class Scottish newlyweds have been isolated in a hospital for several days after having tested positive for the H1N1 virus. "It is a tragedy only for people living in slums in Asia...
...Huang says the trend is worrisome, partly because it could undo progress made in freeing up China's economy. "In the short run, the numbers may look good ... (but) a year or two from now, if China only relies on the state sector to drive growth, the fundamental distortions in the Chinese economy today will get worse...
...does not put much income into the pockets of the average Chinese and therefore it does not raise consumption," says Huang. "A year or two from now, suppose that the U.S. does not resume its previous pace of consumption -which is very likely- then the huge state-sector investments will create another round of excess capacity...
...Huang also worries that by making state-owned enterprises a priority for stimulus efforts, the government could undermine the productivity gains made by China's increasingly competitive private sector. He says that it is "quite likely that productivity growth will completely disappear this year ... then all you have is this brute-force investment growth which always leads to a crash...
...long as the global financial system is in disarray, China will be hard pressed to withdraw its support for SOEs and stem the private-sector decline. But if it wants to ensure that an economic recovery lasts, it may have to. "If you believe one of China's problems over the last 10 years is a large misallocation of capital ... the debate is that you're seeing a continued misallocation," says Pettis. Some argue this matters little amid the global recession "when the house is on fire," he says. The risk is that in China's push to extinguish...