The manager, who wanted to remain anonymous, said: “The Chinese delegation has said all week that there will be double-digit growth for years to come and the Brits have lapped it up. But the data doesn’t add up. We think we’ve experienced credit bubbles over the past few years, but China is the biggest. And yet the global economy is looking to China as not just a crutch but a springboard out of the recession. It’s crazy.”
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Thats a short interesting link. So, a centrally controlled demand economy can overproduce? So, they aren’t as “capitalistic” as we are often led to believe? Let foreign demand set the number of toy factories because that “makes sense” but oversupply office space for the domestic market FOR WHAT REASON? I guess “being in power” and telling others what to do is a hard habit to break?
Saw a show last night about the government process of taking farm land for development wherein Beijing gives a certain amount of money to the local political leader and says “get the land” without any further checks and balances. Turns out, the farmers get low-balled and the local government ((goveneor?)) sells the land to the developers for a tidy profit. And yet: net/net I suppose it actually is “good” for the economics of China.
Can you recall years ago that negative trade balance was “a good” because it was cheaper than simple charity? Back when we were on top of the world.
Can’t we just give the Chinese people all credit cards? That should buy us what… another 10 years?
Dismal–boom bust cycles occur in non demand economies too==those corrupted by the same greed you note when regulations are not in play.
I post though to agree further with you that the “bubble” is not as important to focus on/recognize as the ROTTEN FOUNDATION that is China.
But every example is different and unique. Will China fall in this “model” you relate? Or is life much more complex than that? Yes, I think so. Thats the beauty.
The smart money is 8% growth this year in China. Food and real estate prices are pinching the low and middle classes.
Do you wankers pray on one knee or both?
One thing about China is that their spending lot’s of money on roads, bridges and trains. Something the US started to do in the 50s but never kept going very well with the maintenance. It will be interesting to see if China can manage its resources better then the US did. Because the old US is now the New China and who will replace China is anybody’s guess.
Jescott–shouldn’t that be: “The New China is the old USA?” First you rape, then you pillage.
Doesn’t everyone root for India to replace China? Democracy, English, Rule of Law, no birth control policies.
Its like India of the Future is Like the USA never was?
Is the China of the 2010’s the Japan of the 1990’s. In the 80, Japan was unstoppable, then their property bubble burst. I wonder if the same will happen with China.
China has had thousands of years to become a Superpower: they have been organized, productive, and fierce. It would seem they are unstoppable.
Yet through time they have shot themselves in foot again and again. Why? Because they are obsessed with petty squabbles that derail past progress.
We will see if their egos will be brought down far enough to take the foot-shooting finger off the trigger. I doubt this is possible.
India is a beautiful cultural lotus that thrives in a social cesspool.
This is exactly what I have heard from my friends in China, especially with the real estate picture. Even with centralized control, people are the same the world over.
Welcome to capitalism: it’s all a bubble.
We borrow money from China. We use it to buy stuff from China. They borrow money to make more of the stuff we buy. Then they loan us the money to buy it.
Makes sense to me.
Capitalism works the same everywhere.
If the money’s flowing into MY pocket, then the systems’s working OK.
At some point the one child thing is going to implode China but I may be dead first.
I would not count on China failing before we do unless we get our wasteful ways under control.
“Is the China of the 2010′s the Japan of the 1990′s.”
You mean 1980s, but your question is a good one. The answer is: China is what Japan was x10. You know about what’s happened in Dubai, with a sea of empty skyscrapers. China has literally dozens of Dubai’s.
I would be very short on the countries that feed China with commodities.
“I would not count on China failing”
I would, and it would be wise to prepare for this.
Its only a bubble if its bursts.
It can only burst if they spend all the money we’ve got to pay back to them on wine, women and fast cars.
As long as they are wasting it on infrastructure, its not a bubble, its nation building.
Some bubbles can go a long time before they burst. It will happen. It’s just when. With a 20 % burn rate on the funds cash. If you go with this fund it better happen in 4 years or they will have no cash left to cash in on the downside.
China has an interesting problem. They need a low worker wage, and lax environmental laws in order to keep manufacturing their. However, once people start making a decent wage they inevitably want a higher wage. Also those same people do not want mercury and lead in their water killing their children.
The problem is that stricter laws, and higher wages will chase manufacturing away from china, which the government does not want. But they cannot also keep the wages artificially low for too long or the people will start to revolt.
Its a balancing act for China thats for sure, if they lose their balance it all collapses around them.
85% of China remains agrarian, and has not been affected by this ‘bubble’.
If the “bubble” pops, it will be because the west has gone bankrupt and isn’t buying their ‘stuff’… Chinea will go back to being 95% agrarian, while those in the USA will be in food lines.
The Chinese government is working on true long term projects that will help keep the country going during slowdowns.
The true indicator of China’s future: they are investing in education like crazy, while her in the USA we are actually cutting it back, starving schools, and actually thinking of eliminating 12th grade to save money.
The USA is like the Roman Empire at the end of it’s days… illusions of power but the infrastructure is rotting away. Spending wildly on Defense (which can’t win a war bigger than Granada), while allowing education, industry, social services and infrastructure to perish. Protecting the wealth and status of a few above the benefit of the country overall.
Lou Minatti said “…it would be wise to prepare for this. (China falling)”
By doing what?
I have a friend in Shanghai I used to talk to regularly on Skype, before it got blocked in China (a few months ago). He’s an accountant there. This is exactly what he was telling me. He said “don’t believe all the stories about China’s great economy, it’s all going to come apart sooner than later”. He would note that the Government is just feeding lies to the west to make China seem more successful than it actually is.
I miss talking to him. I would research stories and pass the info to him, that he could not find over there. Mostly about politicians that disappeared there and other news events involving China. Oh well. Hope he and his family are doing ok.