Posted by: Gregoryno6 | December 1, 2013

The End Of The Chinese Economic Miracle.

An article by George Friedman at Forbes Magazine.

China’s financial apocalypse is one of those things that is regularly predicted. Six years ago people were saying ‘Just wait until the Beijing Olympics are over – the fènbiàn will hit the shān.’ It didn’t quite work out that way.

Not that I’m a skeptic on this particular disaster. There is evidence enough that a lot of the money in the Chinese economy is just invented out of thin air.

How then do they stay on the tightrope? Partly because their financial system is so secretive; nobody really knows the numbers, probably either within China or outside. Deliberate ignorance is also a factor. Nobody knows because nobody really wants to know. China has been touted time and again here in The Great South Land as our new Best Fiscal Friend. Beijing wants our iron ore and our agricultural product. Like ice water in the nuts to admit that the renmimbi is worth less than Monopoly dollars.

So everyone ignores the problem for as long as possible – the slow road to disaster. Holy fuck, the roof is caving in! I never saw that coming!

Ask Greece how that strategy worked out.

 

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Responses

  1. Smile Greg

    But pray, tell me, what is going to happen to the rest when China caves?

    That’s point one. Point two is: Who is most likely to get up from the ashes after all caved?

    Smile again.

    IkeJ

    On 12/1/13, The mind is an unexplored country.

    • Question one – the results will probably be worse inside China than outside, Ike. Manufacturing there is losing its competitive advantage; wages are rising. Quality control has been an underlying issue for years as well. A number of US firms have moved their production lines back to America as they’ve realised this.
      Loss of future employment and the collapse of the bubble economy creates a potential for civil unrest that must have the men at the top in Beijing worried. Worried at the very least.
      As for who gets up afterward – I believe that both our nations would be well positioned. Here, we are finally beginning to understand the cost of subsidising car makers for decades. GMH is the worst offender recently, but all have been guilty to some degree of shafting the taxpayer – begging millions from Canberra, and getting it only to say a while later ‘Too bad, but it’s not working out. We’re closing the factory anyway.’
      We have a potential workforce, and, I believe, an itch to do something new. We’re tired of government money being used as a perpetual handout but using it to kickstart new industries would not be unwelcome. I’m assuming the sentiment is similar in your part of the world – am I right?


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