China's Economic Train Wreck?

[ThaSaltCracka]

Thoiughts?

Is this really possible? Also, I am amazed at how much control Government officials have in their economic policy. It seems that China has worse lobbyist and interest groups then us.

[bobman0330]

It seems very possible. Another aspect to consider: A lot of power is in the hands of local and regional bureaucrats, whose main objective is to look good in the eyes of their superiors. It's probably not a good career move to encourage your region to grow at a sustainable 7% annually when everyone else is cranking out an unsustainable 11%. Maybe things will burn out in 5 years, but that bureaucrat hopes to be long gone. Read up on, if you're not already familiar with, public choice theory. I suspect it has a lot of application in China.

[adios]

The reasoning presented in this article has been out there for quite some time. For instance Greenspan discussed the dangers of Chineese bank lending practices in Congressional testimony years ago. My sense is that economic growth in China is more than ample enough for the "cheap" money Jubak discusses (based on what we see in the U.S. and using Jubak's metric money seems cheaper here FWIW). Could be convinced otherwise.

[ThaSaltCracka]

[ QUOTE ]
My sense is that economic growth in China is more than ample enough for the "cheap" money Jubak discusses

[/ QUOTE ] Would you mind explaining why you think this.

[Utah]

Interesting article but I dont see the huge problem for China even if the author is correct. Even after a big bubble burst, China is armed with a technologically advanced and well trained workforce and armed with a modern industrial infrastructure. The net result of all this growth is a huge competitive leap forward regardless of any big bubble setbacks.

[Howard Beale]

[ QUOTE ]
Interesting article but I dont see the huge problem for China even if the author is correct. Even after a big bubble burst, China is armed with a technologically advanced and well trained workforce and armed with a modern industrial infrastructure. The net result of all this growth is a huge competitive leap forward regardless of any big bubble setbacks.

[/ QUOTE ]

Would you please answer a layman's (hopefully not stupid) question?

What happens if China's econonmy goes into decline and they can no longer continue to finance the U.S.'s budget deficit? What does that do to the U.S. economy and how does it affect how much the U.S. is able to import from China?

[Copernicus]

[ QUOTE ]
[ QUOTE ]
Interesting article but I dont see the huge problem for China even if the author is correct. Even after a big bubble burst, China is armed with a technologically advanced and well trained workforce and armed with a modern industrial infrastructure. The net result of all this growth is a huge competitive leap forward regardless of any big bubble setbacks.

[/ QUOTE ]

Would you please answer a layman's (hopefully not stupid) question?

What happens if China's econonmy goes into decline and they can no longer continue to finance the U.S.'s budget deficit? What does that do to the U.S. economy and how does it affect how much the U.S. is able to import from China?

[/ QUOTE ]

Not much. Look back to what happened when the markets in Japan tanked and they held a ton of US paper and real assets. Their stagnation lasted more than a decade, during which our economy continued to outpace the rest of the world.

[ElliotR]

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Not much. Look back to what happened when the markets in Japan tanked and they held a ton of US paper and real assets. Their stagnation lasted more than a decade, during which our economy continued to outpace the rest of the world.

[/ QUOTE ]

What years were these again? And what measure of the economy are you referring to when you say outpaced?

[toor]

first of all, china doesnt subsidize our budget deficit but rather our trade deficit. What happens if they stop? THe US dollar loses value relative to the yuan.

Then imagine what happens, if their goods become twice exspensive to us and our goods become half as exspensive to them. So, we start exporting more they export less. How that affects the economy is somewhat a matter of debate but many people believe that it will improve for us. We will be able to buy less in the short term, but our production will go up.

Hopes this helps.

[Howard Beale]

[ QUOTE ]
first of all, china doesnt subsidize our budget deficit but rather our trade deficit. What happens if they stop? THe US dollar loses value relative to the yuan.

Then imagine what happens, if their goods become twice exspensive to us and our goods become half as exspensive to them. So, we start exporting more they export less. How that affects the economy is somewhat a matter of debate but many people believe that it will improve for us. We will be able to buy less in the short term, but our production will go up.

Hopes this helps.

[/ QUOTE ]


As I said, I'm a layman but it seems to me that they buy a fortune's worth of our Treasury bills and that finances our deficit. If their economy slacks off then they don't have the same amount of money to buy our T-bills and the U.S. taxpayers have to take up the slack of either funding the deficit or doing w/o a lot of gumint spending that the citizen would have to cover out of his pocket therefore leaving less money to buy Chinese products, etc.

So that was what I was wondering.