good review of China's sad state of economic affairs

derryb

The China Clock Goes Tick Tock

"China. A behemoth government stimulus since 2008, a shadow banking system that has grown exponentially and is as opaque as can be, and a level of corruption most South American countries cannot touch. What’s not to like? And then it all comes back to earth. The transition from central control to free(r) market is never going to be easy, trying to juggle both at the same time is another thing still. And yes, China’s easily big enough to drag us all down with it.

I don’t know about you, but I don’t see this end well. The sunny side, though, is that we’ll need to start making a lot of our own stuff again. Sunny because, you know, we’ll create jobs. And can we please not do all the useless plastic trinkets, have a little more taste when we rebuild our manufacturing?"

Looks like they're gonna need all that gold they've been stacking.

perkdog

Id love to see China fall apart

MGLICKER

<< <i>Id love to see China fall apart >>



As well. Might get ugly though when the US debt that they hold is Shanghaied.

Silveraholic

We'll never rebuild our manufacturing. Why would a company invest here when they can pay someone 50 cents an hour with no benefits? China is not the only manufacturing game in town. There is Indonesia, India, Africa, etc. It's a global race to the bottom to drive down wages for everyone. The big corporations win and we the people, lose. It's not just manufacturing either, it's engineering, IT, customer service, and lots of other professions being outsourced.

derryb

Making a global economy work is a lot like making a school system work. Sometimes the bright kids have to suffer in order to bring the teaching level to the not so bright kids. For the record I stand firmly against economic globalization for this very reason. Globalization is nothing short of economic socialism.

MGLICKER

<< <i> China is not the only manufacturing game in town. There is Indonesia, India, Africa, etc. >>



Well said. Japan the post WWII low cost industrial provider before China and Korea out priced them. Economic depression there ever since.

Baley

they are in trouble because they spend all their money stacking gold instead of buying what is important?

cohodk

<< <i>The China Clock Goes Tick Tock

"China. A behemoth government stimulus since 2008, a shadow banking system that has grown exponentially and is as opaque as can be, and a level of corruption most South American countries cannot touch. What’s not to like? And then it all comes back to earth. The transition from central control to free(r) market is never going to be easy, trying to juggle both at the same time is another thing still. And yes, China’s easily big enough to drag us all down with it.

I don’t know about you, but I don’t see this end well. The sunny side, though, is that we’ll need to start making a lot of our own stuff again. Sunny because, you know, we’ll create jobs. And can we please not do all the useless plastic trinkets, have a little more taste when we rebuild our manufacturing?"

Looks like they're gonna need all that gold they've been stacking. >>



Now you're catching on.

3 years ago I said China was just as the USA in 1929. Modern economic theory seems to have screwed up that prognostication, but the collapse of China is inevitable as the world seeks cheaper labor--Malaysia, India, Vietnam--and there is a limit to building uninhabited cities. Since only rogue nations place any value on the Yuan, China will be forced to used its gold holdings to entice foreign investment.

derryb

<< <i>Since only rogue nations place any value on the Yuan, China will be forced to used its gold holdings to entice foreign investment. >>



Guess this adds Germany to the growing list of "rogue nations."

My constant references to China are not because of some great love I have for it. They are to point out that China has been making serious effort be a big player in the world economy. Doing so pushes the US closer to the edge of the stage.

cohodk

Dont get too caught up in this swap lines business. The ECB has arrangements with all major central banks. And China with a $9 trillion economy certainly qualifies as a contender in the global economy. Germany simply realizes there is potential in China, with its vast demographics, and simply wants to simplify commerce. The swap arrangement is in no way shape or form a validation of the Chinese currency.

To say the USA is being pushed off the global stage is a stretch of massive proportions.

What happens when China's economy shrinks to $6 billion?

China is going to be upstaged by India over the next 20-40 years.

VanHalen

<< <i>We'll never rebuild our manufacturing. Why would a company invest here when they can pay someone 50 cents an hour with no benefits? China is not the only manufacturing game in town. There is Indonesia, India, Africa, etc. It's a global race to the bottom to drive down wages for everyone. The big corporations win and we the people, lose. It's not just manufacturing either, it's engineering, IT, customer service, and lots of other professions being outsourced. >>



Africa is huge (1 billion people) and largely untapped. Expect large portions of western and central Africa to be tested for development soon. When studying international economics Africa appears as a wild stallion that could win the Kentucky Derby with proper training.

That said, China's GDP will surpass the USA by 2025.