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China's economy - crash imminent?





joxang
Should you visit China, you will see huge development projects happening everywhere. Residential blocks, new shopping centres and even new factories are being built everywhere.

You may also see, especially when moving out of the cities, more and mroe abandoned projects that have either run out of funding, or (more likely) cannot find buyers and have being bankrupted.

The problem with China's huge growth is the balance between supply and demand. Supply is growing hugely, but the internal market has reached saturation, and no one knows how much more China's export market will grow by. Supply already vastly exceeds demand. Should it exceed it more, the economy is very likely to collapse.
ahsanrao
china has 1/4th of total population.. so its the big attraction of sellers .. Also all of major companies shifting ther manufacturing plant to chine,,
because the labour is very cheap plus there policies always supports the manufactures and we can see the result.
fastest growing economy of world. just in 50 or more years.
osbits
ahsanrao wrote:

fastest growing economy of world. just in 50 or more years.

50 years are enough...
TrueFact
I guess not. China built its economy theory on the very opposite of the Russian theory. The Russian made high and very high quality products and the result that the inner and local market didn't need to buy more as the old product still working perfectly. The Cold War helped to make the Russian economy collapse but that's the theory. China is the opposite you'll always need a replacment for the product you bought... and the cheap price will make you make you desicion very fast. That's the Chinese theory. and I say not less that 100 years cuz more than that I can't tell if the world will go the same way it is now.
ahsanrao
40-50 years is nothing in economic life of a country.. agree with true fact .. but with the cheap prodcut they also give variety and quality.
megalania
joxang wrote:
Should you visit China, you will see huge development projects happening everywhere. Residential blocks, new shopping centres and even new factories are being built everywhere.

You may also see, especially when moving out of the cities, more and mroe abandoned projects that have either run out of funding, or (more likely) cannot find buyers and have being bankrupted.

The problem with China's huge growth is the balance between supply and demand. Supply is growing hugely, but the internal market has reached saturation, and no one knows how much more China's export market will grow by. Supply already vastly exceeds demand. Should it exceed it more, the economy is very likely to collapse.


China's economy will continue to boon until, about 50 years from now, the supply of poor people willing to work for peanuts diminishes. As it is, you have a lot of moderately skilled individuals (they can use the machinery) doing assembly jobs and enough very skilled workers that you can outsource programming jobs etc and still save a lot of money. Either the assembly workers will become fed up with their crappy condition and revolt or the skilled workers will demand more money.

For the time being there really isn't that much to worry about
insanesnoopy
The Asian Giant will continue to boom for my lifetime at least.

I don't see a crash imminent at all. One ot keep an eye on is India though
poiko123
Man with pipe: Yes, the Pacific Rim economy is still a tad shaky for my taste.
Stewie: Oh stop it stop it, look here, you can't become a bloody fiscal hermit crab every time the NIKKEI undergoes a self correction. Asia's market has no where to go but up.
Man with pipe: Interesting.
Stewie: Indeed.

http://downloads.quahog5news.com/quotes/season2/FG108/LS%20-%20fiscal%20hermit%20crab.mp3


I do not see an utter collapse in the near future. I believe China's government realizes how much supply they have and will curve economic growth to prevent this. What I do see happening is a temporary recession sometime within the next 5 to 10 years and the markets under go a self-correction. They must adapt to a slowed economic growth.
rshanthakumar
One of the major reasons for consistent and steady growth of china is not just the size of the country but also the divergent businesses the country has promoted. Textile on one front, tourism on the other, electronics and toys elsewhere. My! this is something wonderful and it is happening during our time and we are gifted to see such major revolutions happening. Another ten to fifteen years down the line, the world equations will be different. Wait for it!
hunterm
China has raised interest rates in august for the second time this year trying to cool its booming economy.

The central bank increased the main lending rate by 0.27% to 6.12%, to slow down a surge in construction and credit.

They have got a lot of work to do to cool that economy. huh.gif

By the way have you noticed how quiet the US politicos have gone about the value of the Chinese currancy just lately. I wonder if old Ben B at the Fed has explained to them about the risks of importing inflation
freeedy
I don't think CHinas economy will crash soon, since most of their supply is being exported, and many countries are importing there prodcuts because they are really cheap. The only way in which the economy crashes is if this international demand stops, and the only way in which the demand for cheap products stops is either by endin with poberty or by changing the perception of qualty products. Chinesse prodcuts are cheap but the have no quality, probably in the future people will realize this and stop demanding does products, however is really hard for a poor person to get one of the same product at higher prices. So I think this chinesse boom will not end soon.
TrueFact
They depend on reselling the same product cuz they know it will not last for a long time. They earn a little but selling too much quantities.

This idea will keep it growing and growing but the international economy can not be judged for long time as there is ups and downs all the time.
biedr0na666
in Poland you can hear such a joke about the Chinese.

you know what a man has to do in his life, right?
1) plant a tree
2) build a house
3) raise a son

and what a Chinese man has to do in his life:
1) t-shirt
2) sneakers
3) tape recorder

hope no Chinese folks would read that (sic!) Wink
discountcontacts
China is the awakened dragon that has been asleep for the past few hundred years. Since awoken, it is destined be one of the last great empires of humanity that is a distinct political entity. We now live in a world characterised by complete globalisation- where almost every corner of the globe interacts with each other or is accessible. A world where there is open dialogue, instant media coverage and communications. Wars are becoming the least used means of conflict, as the overriding expectations of peace and justice in the international community limits the benefits of resorting to arms.

For example, the US attacked Iraq, but is now entrenched in an absolute economic mess, and military disaster. If it was a couple of hundred years back, they could have been less observant to human rights and as a result guerilla warfare against them wouldnt be very effective. But fortunately, we live in a world that believes in peaceful prosperity and China is doing fantastic is this regards. It is simply kicking back, avoiding any conflicts or political bull- abstaining in a lot of controversial international voting etc. All it cares about is $$$$ cash and cash. Money makes the world go round. National success is no longer defined by a joint twin of economic and military prowess. It is now only economic prowess.

With money, China can fund their global network of spies to steal the latest US and European technology. China can gradually buy resources, companies---everything but the kitchen sink around the world. So hey, the US Government can be as big of a military as it likes, but if China owns every piece of real estate from LA to New York. Thats a bit of an exaggeration- but what China really is doing is taking advantage of the loopholes of the US's mentality of being the land of the free. On the other hand, China remains tightly controlled. People can't even use the internet without a licence. But this control, is a very intelligent economic move, it removes the vulnerability of its economy to international risk, and artificially maintains Chinese exports international competitiveness and hence Current Account Surplus. Uncle Sam owes Uncle Chan what was it $US 300 billion?? and rising.

China also tightly controls who enters its borders and clamps hard on any suspicious public activity. Those Falun Gong guys are hilarious, why not do tai chi- why plagiarise the ancient art and give it some lame new age name?? My hypothesis is they are a bunch of bored and impatient people who want democracy in China and they want it now. They were potentially going to succeed in creatin a people power revolution but the preemptive, omniscient CCP took them out before they got there. Objectively speaking, the Communist have done some stupid things, but overall at least they have maintained national mainland unity and fended off foreign powers from rape. Namely Italy, United States, France, Austria-Hungary, Japan, Germany, United Kingdom, Russia.

All this mantra from the US directed at China to improve its human rights record is just hypocrisy. Also, what it translates to is patronising the chinese and telling them that their form of government is superior. China is actually progressing towards democracy but at a slow controlled rate. Therefore, it is unlikely to be any major economic upsets, despite the fact that the business cycle is inevitable. The ride to destiny won't be smooth, but the ends will justify the means and it will reach its goal of retaining its rank as the first nation on Earth.

First comes money, then comes the arts, the sports, the military then tradition and lastly hegemony. Wait for it people, the future is coming circa 2036.
Zeusik
Yes - the biggest it's not only my opinion but many of the economist.
In my honest opinion not China but rather US is a bankrupt. China is the main buyer of American bonds and if it stopped buying them US will be in danger - recession and bankrupcy of monetary system would be reality. We'll see.
minsusales
even though anerica depends on china to buy their bond, china also rely on america to buy their exports, china's biggest exporter is after all america. i believe if china stop buying american bonds, then america will be in trouble so would china be in trouble. i believe 5o yrs is not enough for china to become a super giant, as it still have alot of internal problems, the difference between rich areas such as shanghai, and honkong to rural areas in the west is still very big. and still getting worse...
TomGrey
venkateshwarans
The other serious problem for China should be it's huge $1trillion of dollar resrevers. China also has a problem of complacency. you can't make changes in china like japan.
hofodomo01
I think one of the biggest obstacles that China's economy is facing is their own citizens...

The government and corporations go out to make money, yet many of the everyday citizens just try and make money by going out on some street corner or sidewalk, lay a spread of random stuff, and hope to attract some roadside customers....

They don't know how to make money, and that's the majority of the population...
Detremmerie
venkateshwarans wrote:
The other serious problem for China should be it's huge $1trillion of dollar resrevers. China also has a problem of complacency. you can't make changes in china like japan.


Indeed, reserves are generally not a good thing I believe as they don't stimulate internal economic growth in any way.

For the record; China is considering diversifying away the reserves. Currently 72% of the 1T reserves are denominated in USD. Products that may be interesting are energy and precious metals.
However, this again poses a risk ,as pulling such amounts of money out of the dollar will certainly cheapen up the dollar against the Yen, which will certainly curb the China export, thus curbing economical growth
wlb
This topic has been some research in china.
China's economic growth is relying too heavily on past material inputs of capital and labor elements of the economic growth mode, In recent years reached its peak effect. Now we have to rely on the input from major expansion to mainly depending on productivity gains。
mailforarvind
there are a number of factors you must consider about china

1 political instability is not at all existent, and in the villages they have cleverly introduced self governance, where people can contest elections

that has largely reduced any political opposition to one party rule

2 chinese economic policies have ensured that even with mncs coming in to set up base, they have to have local partners
hence now local companies are becoming world class

for example lenovo purchased ibm
and westinghouse of us could have been purchased by a chinese firm, but us nationalist outcry prevented that

3 domestic market is growing very fast, and even with that limitation, chinese companies are now going global

that means that even if the domestic market stops growing , then more lenovos will ensure that chinese products have a global market

4 it and it services
some years ago chinese government transformed around 250 odd universities into world class centres of it excellence spending millions of dollars to do that

and with english being made compulsory, in some years chinese it companies will become global competitors
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