Saturday, August 11, 2012

Article: Two Prisms for Looking at China’s Problems

CHINA is confronting some serious economic problems, and how Beijing does — or doesn’t — respond to them could bend the course of the global economy.

First, China’s real estate bubble is deflating. But its economy also seems to be suffering from what we economists call excess capacity — an over...

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Anand Rajadhyaksha said...

China offered to be the world's cheaply run factory and industrialists the world over closed down theirs to increase profits. This put people out of jobs and increased load on Govts while reducing the number of taxpayers. It also took out that much spending power out of the economy.

That shrank the markets and the demand. This in turn has reduced the demand for Chinese goods, cutting down their orders.

Cannot say what the Chinese will do with the strain on the economy, given their aggressive temperament and a military build up to match. For a country ruled by wimps, prosperity for China is essential to keep it content.

OverTheHill said...

Here's an article from the Naked Capitalism website written by someone on the inside, or perhaps periphery (the writer appears to be based in Hong Kong):

Death of the China Cult
By Zarathustra

A couple of excerpts:
Since the beginning of time (well, that’s an exaggeration of course), China has had the creativity and necessary skills to create fake and low quality products beyond anyone’s imagination. We also knew that corruption in China was horrible since the beginning of time (and this is not an exaggeration, as that has been a recurring theme of the rise and fall of different dynasties ever since Imperial China).
[This is] not just history, but current reality. China is still full of businessmen who make crap products that are dangerous for human consumption.

And an extract from one of the comments:
"...You still have tons of Chinese garbage products but the western customers have run out of money to buy them. The next thing they will be faking is sales...."