Is china really immune to the crisis?

Does the Chinese govt. really have the tools needed to keep its economy so resilient? Perhaps, but it is far from obvious.
Twofold:-
1. Export exposure of the Chinese economy.
2. Investment environment operated over the course of last 6 years.

China has misplaced capital in a very dreadful way. So, this builds up bad investments in the capital & capital structure.

If these two problems persists this year, 2009 then this will tend the Chinese economy growth much to zero.
If this happens, then we will see cut in interest rates, their govt. will spend more money & will be depreciating the currency. All there was a thought to devalue the currency.

Slamming china’s export sector:
America’s deepening recession is slamming china’s export sector, just as it has everywhere else in Asia. The immediate problem is a credit crunch not so much in china as in the united states and Europe, where many small and medium-size importers cannot get the trade credits they need to buy inventory from abroad.
Foreign-exchange reserves:
With roughly $2 trillion in foreign-exchange reserves, the Chinese do have deep pockets to fund massive increases in govt. spending, and to help backstop bank loans. Many leading Chinese researchers are convinced that the govt. will do whatever it takes to keep growth above 8%. But there is a catch. Even if successful in the short run, the huge shift toward govt. spending will almost certainly lead to significantly slower growth rates a few years down the road.
Infrastructure projects:
Simply put, it is far from clear that marginal infrastructure projects are worth building, given that china is already investing more than 45% of its income, much of it in infrastructure. But is there any reason to believe that new loans will go to worthy projects rather than to politically connected borrowers?
Balance between govt. and private sector expansion:
In fact, china’s success so far has come from maintaining a balance between govt. and private sector expansion. Sharply raising the govt.’s already outsized profile in the economy will upset this delicate balance leading to slower growth in the future.
Reasons to doubt sustainability:
There are strong reasons to doubt the sustainability of china’s growth paradigm.
The environmental degradation is obvious even to casual observers.
And economists have started to calculate that if china were to continue its prodigious growth rate, it would soon occupy far too large a share of the global economy to maintain its recent export trajectory. So, a shift to greater domestic consumption was inevitable anyway.
Interestingly, the US faces a number of similar challenges. For years, the US achieved fast growth by deferring attention to a variety of issues, ranging from the environment to infrastructure to health care.
Bringing these two countries’ savings into line:
One of the great challenges ahead is to bring the two countries’, the US and the China, savings into line, given the vast trade imbalances that many believe planted the seeds of financial crisis.
Lure Chinese than US for private consumption demand:
It would be preferable for china to find a way to lure Chinese than US for private consumption demand, but the system seems unable to move quickly in this direction. If govt. investment has to be the main vehicle, then it would be far better to build desperately needed schools and hospitals than ‘bridges to nowhere’, as Japan famously did when it went down a similar path in the 1990’s.
One way or the other, the financial crisis is likely to slow medium-term Chinese
growth significantly. But will its leaders succeed in stabilizing the situation
in the near term? Hope so, but one would be more convinced by a plan titled more toward domestic private consumption, health, and education than to one based on
the same growth strategy of the past 30 years.