China suffers amid euro slump
- 3 November 2011
- From the section China
A Venetian-style gondola cruises lazily down what, at first glance, might just pass for a one of the canals of Venice.
Bridges cross the waterway. A replica of the bell tower of St Mark's Basilica, one of Venice's landmarks, stands by the canal bank.
"Welcome," a woman's voice says on the recorded commentary, "to the South China Mall".
While the canal looks European, we are in a shopping mall in Dongguan in southern China.
It bills itself as the world's largest commercial mall. Some call it the Great Mall of China.
The canal wends its way through the middle of the mall.
The gondolas are full of Chinese schoolchildren, kitted out in orange life vests. Their trip on the canal takes about 10 minutes to complete.
China today has enough cash to recreate a little bit of Italy just to draw people to a shopping mall.
That's why, in its hour of need, Europe is hoping China will sail to its rescue and use some of its money to help bailout the eurozone.
But if you venture into the rest of the mall, it is even more bizarre. Apart from a few shops the place is almost all empty.
There is floor upon floor of shops which are nothing but bare, concrete shells.
The escalators stand idle. Rubbish litters the floor.
Of the few stores that opened here, most have closed for lack of customers.
Discarded mannequins stand in one abandoned shop.
There are a few stores and fast food outlets doing business, but it seems people come for the canals and amusements - they don't buy much.
It tells you something about China's economy.
The much vaunted middle-class is still in the making here. Consumption in China, at around 34% of GDP, is a relatively small part of the economy.
If Europe thinks Chinese consumers are the answer to its economic woes, it needs to think again.
Victor Fung, one of China's richest businessmen, and honorary chairman of the International Chamber of Commerce, puts it bluntly when he says: "I certainly don't think China can save the world all on its own.
"Chinese consumption is big and it is increasing, and everyone is forecasting that it will keep growing. But it is still a very small part of global consumption."
China has already said it will not be Europe's saviour. In Guangdong in the south of China you can get a sense of why.
China has a host of its own problems, and they're not just encapsulated by the problems at the South China Mall.
Not far away from the mall the new skyscrapers of the city of Guangzhou soar upwards.
When the global crisis hit two years ago, China pumped money into its economy, sparking an investment and building boom. Last year capital investments made up 46% of GDP.
Today the centre of Guangzhou is thronged with people. Now China is trying to deal with the unwanted effects of that cash injection.
It is trying to slow its economy, to control inflation and to stop runaway credit growth.
That means China may not be able to repeat the trick of a new stimulus to keep its economy powering along if there is another recession in the West.
You can see the impact of China's slowing down at one of its many scrap metal yards.
Recycling old metal used to be very profitable, but not any more, says Chen Feng, who works at a scrap yard.
"Metal demand has gone down," he says. "International prices have gone down and prices in China have dropped."
Not far from the centre of Guangzhou is the Canton Fair, China's biggest export trade fair, which ends this week.
Models strut on a catwalk, showing off a range of bags and suitcases. Buyers from Europe, Africa, India and elsewhere look on.
The deals done with Chinese suppliers during the month-long Canton Fair should total around $36bn. That's roughly equivalent to the annual economic output of a small nation like Lithuania.
The range of products on display in the giant exhibition halls is enormous, from shoes to electric massage machines, wedding dresses, ultrasound scanning equipment for hospitals, ties and camping gear - all of it made in China.
Over 200,000 foreign buyers attend. But the number this year from Europe and America is down.
China's economy still relies heavily on exports. At a time when it is slowing and has not yet developed a big enough domestic consumer economy, China is vulnerable.
A new downturn in Europe, its major overseas market, could cause real difficulties for China.
What you hear at the Canton Fair is that Europe's crisis is definitely affecting orders.
Elle Cheung, who sells medical supplies to European companies, says some of her customers are not even attending the fair this time, and those that are here are not buying much.
Back at the South China Mall there are still no shoppers. Some stores are being allowed to stay open rent free, just to fill space.
Pang Yingfeng sits patiently waiting to sell roller blades, but nobody enters her shop.
"There are fewer and fewer people coming here," she says.
"I think the economy is getting worse. Some days not a single person even walks into this shop."
Of course many malls in China are doing well. But while the gondolas in this one are full of visitors, they are not spending much money.
And, like its thrifty shoppers, China may decide it is better to hold on to its cash in uncertain times, rather than bail out Europe right now.