Will The Chinas Economy Collapse?

In the United States, the New York Times published an article questioning will the Chinas economy collapse

. Imagine this scenario that is in recent years, the development of the field of economic growth primarily relies on architectural developments in, while the development of building areas is dependent on rapidly rising house prices; therefore, typical characteristics of the economic bubble appear one by one. There has been rapid credit growth, and this growth is not, to a large extent, by traditional banking, but through unregulated shadow banking. Today, the foam is broken and we do have reason to worry about the possibility that the economic crisis will come. This sounds like a description of Japan in the late 1980s, or like the portrayal of the United States in 2007, but this was actually about China today.

In the past 10 years, the most amazing of the China's economy is that although the level of household consumption has been growing, it has always lagged behind the economy's overall growth. At present, domestic consumption only takes up 35% per cent of GDP. So who is to buy Chinese products and services? Due to the decline in domestic demand, China increasingly depends on trade surpluses to keep manufacturing development. But in contrast, China is more dependent on investment.

The problem is, under the condition of weak consumer demand, what is to stimulate investment? Answers are constantly inflating housing bubbles. Do we know that the bubbles occur in the real estate market? Signs have already been produced, not only in the rising house prices, but also in the speculative passion. One good point is that now, the Chinese government has adopted several measures trying to squeeze the bubbles out of the real estate market.

It said that there was no need to worry about China's economic collapse, because Chinese leaders would take all means to cope with the economic downturn. However, these stresses such as no need to worry about are very familiar. In the 80s of the last century, there were also similar comments on Japan at that time, saying that the powerful Japan Ministry of Finance should be able to control the situation. Then, someone said that the United States would not repeat Japan's fate. However, the reality is that the situation in the United States was even worse than that in Japan.

In a word, the Europe debt crisis has battered the world economy seriously and a lot of countries have been involved. Therefore, people really do not want to see a new source of the economic crisis.

by: annie

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