Is China Really a Bubble Economy?

Discussion in 'Economy' started by PoliticalChic, Jan 17, 2010.

  1. PoliticalChic
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    PoliticalChic Diamond Member

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    "China has plenty of risk and obstacles that anyone who invests there should understand. There are issues that press now regarding lending growth, empty office towers, concerns over real estate speculation, the government buying goods (artificial demand), some worry about the statistics being fudged, should the yuan be allowed to appreciate it could hurt exports and so the entire economy (job loss and slower growth) and further down the road there will be a demographic problem.

    Another part of Chanos' argument is that bubbles are caused by excess credit. Loan growth has been troubling and the South China Morning Post recently reported that upaid credit card debt was up 126% in 2009 (this was reported in the South Morning China Post in late November but is no longer accessible) and we have this from Time Magazine noting that the average household in China saves 25% of disposable income." Is China Really a Bubble Economy? -- Seeking Alpha


    "...China’s growth model is unsustainable because it produces what I would call a Latin American style distribution of income where the middle class is quite small. These comments echo thoughts from Xie’s former Morgan Stanley colleague Stephen Roach, who sees an economic safety net as critical to increasing domestic demand and forming the middle class of which Xie speaks.

    Bottom line: China’s economy is a bubble economy right now. And bubbles do not deflate; they pop." The Chinese bubble economy - Credit Writedowns

    "Take a close look, however, and you may come away thinking China resembles nothing so much as Japan shortly before its stock and property markets melted down two decades ago. A speculative frenzy of borrowing and bidding up is at work. If and when prices crash, there will be hell to pay." The China Bubble - Forbes.com


    "The popping of China's current housing bubble -- considered inevitable by regional experts such as Andy Xie -- could have widespread consequences. If housing turns down in China, China's growth could slow or even decline. And since the entire world is looking to China to lead global growth, then that could spell major trouble for the "global economy is recovering" story." China's Real Estate Bubble Threatens the Global Economy - DailyFinance

    "Quite a few economists just don't believe the rosy picture now being painted by the official numbers.

    For one thing, there is a huge gap between the country's gross domestic product as calculated by the NBS and the aggregate national GDP published individually by provincial and municipal governments. This gap exists because the NBS has always discounted data it gets from the provinces on the assumption that local officials are inflating their GDP growth numbers to improve their chances of promotion.

    But in the first half of this year the gap was a lot wider than normal. All but seven of China's 31 provinces and municipalities reported GDP higher than the national average of 7.1% in the first half and the total as calculated by each province came in about 10% higher than the NBS's national figure." China's Unreliable Economic Statistics - BusinessWeek
     
  2. Douger
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    Douger BANNED

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    Sure they are.
    When the US dollar finally, completely collapses, who will buy all of that useless shit ?
    Remember. Most other countries actually produce many things for domestic use.
    YOU DON't. The US is a consumer nation that relies on the Chinees for everything from packaging your fish, loaning you money for wars, to toilet paper hangers to vegAmatics and nose hair trimmers, dildos,blow up dolls, name it.
    One that market is gone ? China goes down too. The only countries that will have any hope for a future are agriculture based economies.
     
  3. Kevin_Kennedy
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    Kevin_Kennedy Defend Liberty

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    Without the U.S. living off of China China will be better off. Since they won't be propping us up they'll be able to buy their own cheap goods and their standard of living will rise exponentially.
     
  4. Neubarth
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    Neubarth At the Ballpark July 30th

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    What is happening internally I will not comment on though I do know from my souces that Two Hundred Milllion Chinese are underemployed.........

    What I do know is that China is not shipping product like they used to. Look at DRYS or the Baltic Dry Index to see what is happening with shipping. China is in a world of hurt, and it is obvious from international shipping records.

    I expect a total collapse in their stock market soon.
     

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