China's Economy

| Sun Nov. 30, 2008 3:34 PM EST

CHINA'S ECONOMY....The Chinese leadership is worried:

Chinese President Hu Jintao warned at a weekend meeting of the Communist Party's elite Politburo that China is losing its competitive edge as international demand for its products is reduced, according to official state media reports Sunday.

China's growth rate has been forecast to be about 9 percent in 2008, down from 11.9 percent the year before and close to the 8 percent that economists say China must maintain in order to keep the labor market stable.

For more, see Brad Setser's gloss on a recent World Bank report, which suggests that China's actual problems have been domestic up until now (falling wages and tanking real estate investment) but will indeed start to become export based next year. Regardless, the end result is that China will be buying up even more Treasury debt than ever over the next few years. That's probably a good thing in the short term, but not so good in the long term.

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