Tong (Cindy) Li
Adjunct Fellow; Country Manager, Federal Reserve Bank of San Francisco
Asia and Banking and Capital Markets and China and Finance and Global Economy
Dr. Cindy Li is a country manager and analyst in the Country Analysis Unit of the Federal Reserve Bank of San Francisco. In that capacity, she conducts research of Asian financial sectors and produces analyses of Asian foreign banking organizations.
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My recent trip to China: A taste of a booming economy
By: Tong (Cindy) Li
May 17, 2012
Some discussions of China's economic and political future at our Global Conference made me a little nervous. Speakers seem to be worried about a bumpy transition of the country's leadership in the fall. Slowdown is a consensus -- it's a matter of hard landing or soft landing. Some claimed that small businesses are going bankrupt and investment opportunities are scarce. Is the China miracle finally ending?

With these doubts in mind, I headed to China -- where I grew up -- for a two-week vacation. My cousin picked me up at the airport. A Japanese major in college, she first worked as a web designer and then as an IT product manager. She told me her company went under a couple of weeks ago. "How's the job hunting going?" I asked, trying to hide my worries, "I heard that the economy isn't doing so well." My cousin laughed off my worries. She had five interviews in three weeks. By the time I returned to Los Angeles at the end of the week, she had signed a contract with a state-owned enterprise as a project manager. After-tax pay is comparable to what people take home here.

"Most jobs are posted by small private businesses -- and they pay a lot," she told me, "but I only looked at large state-owned enterprises that provide excellent benefits." Hm. I took note: plenty of decent jobs for the average working youth.

A high school classmate saw me off at the airport. He is now a managing director at a local private equity firm. Different from those big name international players, his firm focuses on local high-growth midmarket companies.

"By 2009 I had decided I should have better work-life balance," he complained. "There are endless deals. Now I've learned to be selective and only work on two deals per year. I pick those deals that I find fun to work on, like wineries."

Hm. I took note again: plenty of investment opportunities for those who know the market.

None of the people I talked to, be they government workers, college professors or investment professionals, seriously believes that China will face significant turmoil in political leadership or worrisome growth rates in the years to come. They complained that political leaders spend too much time and energy trying to stay in power, but at the same time told me they are confident in the government's ability to keep the economy running at a fast and stable pace. People differed in opinion about what the growth rate will be in five years, but no one doubted that the economy will continue to grow.

It interests me how different perspectives can be across the Pacific Ocean. Here, as risk-averse investors and observers, we crunch numbers, lay out risk factors, and think China is the Wild Wild West. There, in a booming emerging economy in which risk is business normal, people are optimistic that continuous growth will allow the economy to deal with all sorts of risks.

Then I remembered a comment I read somewhere: "Humility is in order when telling a country that has posted the most spectacular rates of economic growth for the longest periods of time in the history of humanity that other policies would have worked better."

I'll keep that in mind when I write my next article about China's financial vulnerability.