Chinese reference to an economic Titanic

When the Chinese Premier Wen Jiabao starts warning that his country faces tough challenges in balancing economic growth and tightening policies, Australians should at least start pondering just how rosy is our own economic future. When Chinese economic commentators start using a comparison with the Titanic to describe their conditions we perhaps have a reason to be seriously concerned.

At the weekend during a trip to the northern port city of Tianjin, Premier Wen warned that China must avoid piling on adjustment policies, which carry risks of "negative consequences", amid complex domestic and international conditions. "At present, the national economy continues to improve, but domestic and external conditions remain extremely complex, and macro adjustment faces many dilemmas," he said.
The China Daily in its report of the speech had analysts saying his remarks show the tough choices policymakers are facing as rising inflation and signs of slowing economic growth are intertwined complicating the situation. This morning the paper had this commentary:

Xin Zhiming argues that rising inflation and surging inflation make the current circumstances more difficult for the country's economic policy makers than when they reacted to the global financial crisis. Given the already lax liquidity and exorbitantly high house prices, the government has few choices but to keep them under control. "Tightening measures, meanwhile, risk dragging on economic growth, as reflected by the stock market reaction."

I have referred recently in these political snippets to what is happening to the Shanghai Stock Exchange Composite Index being a rough guide to what the market thinks of China's immediate prospects and yesterday's five percent fall just increases my apprehension about what it foretells.

It seems to me that the market has serious doubts about the ability of Premier Wen pulling off the difficult feat of stopping housing and other price rises without stifling economic growth. The risk of a European and global economic slowdown affecting Chinese exports compounds the problem.

Which is what led Xin Zhiming to this Titanic allusion: