Is China headed toward collapse?

Eamon Javers
Politico
Thursday, Nov 12th, 2009

The conventional wisdom in Washington and in most of the rest of the world is that the roaring Chinese economy is going to pull the global economy out of recession and back into growth. It’s China’s turn, the theory goes, as American consumers — who propelled the last global boom with their borrowing and spending ways — have begun to tighten their belts and increase savings rates.

The Chinese, with their unbridled capitalistic expansion propelled by a system they still refer to as “socialism with Chinese characteristics,” are still thriving, though, with annual gross domestic product growth of 8.9 percent in the third quarter and a domestic consumer market just starting to flex its enormous muscles.

That’s prompted some cheerleading from U.S. officials, who want to see those Chinese consumers begin to pick up the slack in the global economy — a theme President Barack Obama and his delegation are certain to bring up during next week’s visit to China.

“Purchases of U.S. consumers cannot be as dominant a driver of growth as they have been in the past,” Treasury Secretary Timothy Geithner said during a trip to Beijing this spring. “In China, … growth that is sustainable will require a very substantial shift from external to domestic demand, from an investment and export-intensive growth to growth led by consumption.”

Full article here

“When the people find they can vote themselves money, that will herald the end of the republic.” – Fall Of The Republic – Buy the DVD here

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  1. 3 Percent on November 14th, 2009

    The whole world is going down!

  2. ron on November 21st, 2009

    I’ve seen similar “empty” cities in China for the last 15 years. And over a few years, these cities have (so far) inevitably filled up.

    The Tsinghua professor quoted in the original news report is exactly right in that regard. All of the previous rounds of physical infrastructure in China has paid off economically and socially.

    There are two numbers which define China, and is far more important than GDP in any given year:

    1) population: 1.3 billion and counting. 2) urbanization rate: 45% and climbing.

    China’s urbanization rate will rise to 70% by 2035. If you do the math, that means 325 million Chinese currently living in rural villages will move to urban cities within the next 25 years.

    And if you do the math again, that means:

    for every square foot of real estate currently in existence in China… it’ll be doubled over the next 25 years.

    it also means building 15 New York’s from scratch over the next 25 years.