A China bubble?

[rbroome]

There are many dopers far more knowledgable about mainland China than I. Hopefully they will chime in and put some informed speculation to my ramblings.

The economy of China looks more and more like a bubble. And if so, when it collapses, it is going to hurt-all over.

Inflation is rising.
There are ghost developments (“ghost cities”) all over the country. A sign of speculation and poor planning.
Traffic in the capital is projected to grind to a halt in 2 years with gridlock. Only one city to be sure, but the economic message to the world will be significant.
college grads are finding it hard to find jobs.
The government is funding a significant part of the growth in the economy with reserves.
I am sure there are other things I haven’t read about lately.

So, what do the knowledgable people say? Is China going to experience an economic cycle-painful but what most economies go through- or will a bubble burst and cause long-lasting damage?

[ITR_champion]

I’ve been reading articles by professionals about the upcoming financial disaster in China for the last couple years. Not clueless speculations posted by anonymous internet users, but real articles by experts at Bloomberg and other such places. (Of course some may charge that the experts at Bloomber and other such places are no more reliable than anonymous internet users. But I digress.) There seems to be rising concern among people in the know that China is on the wrong track and heading for a meltdown, for exactly the reasons that you list. They’ve been building too much of all kinds of things. Not just houses, but malls and factories and so forth. The government has also sunk billions into impressive but mainly useless projects such as the Olympics, super-high-speed rail, skyscrapers, and so on. All of it is being financed by high levels of debt all over, which can’t be sustained in the long run. Sooner or later it has to come crashing down, just as it did in America and Europe.

Further, it’s worth remembering that China is still more communist than capitalist, so the government controls more of the total flow of wealth there than here. When the crisis hits, the Chinese will be even more dependent on the government than we were. In order to sustain its economy, the Chinese government will have only one thing to do: sell of the huge store of U.S. treasuries they currently hold. And that will rapidly bring the pain over to this side of the Pacific.

[Czarcasm]

@ITR_champion

I’ve been reading articles by professionals about the upcoming financial disaster in China for the last couple years. Not clueless speculations posted by anonymous internet users, but real articles by experts at Bloomberg and other such places. (Of course some may charge that the experts at Bloomber and other such places are no more reliable than anonymous internet users. But I digress.) There seems to be rising concern among people in the know that China is on the wrong track and heading for a meltdown, for exactly the reasons that you list. They’ve been building too much of all kinds of things. Not just houses, but malls and factories and so forth. The government has also sunk billions into impressive but mainly useless projects such as the Olympics, super-high-speed rail, skyscrapers, and so on. All of it is being financed by high levels of debt all over, which can’t be sustained in the long run. Sooner or later it has to come crashing down, just as it did in America and Europe.

Further, it’s worth remembering that China is still more communist than capitalist, so the government controls more of the total flow of wealth there than here. When the crisis hits, the Chinese will be even more dependent on the government than we were. In order to sustain its economy, the Chinese government will have only one thing to do: sell of the huge store of U.S. treasuries they currently hold. And that will rapidly bring the pain over to this side of the Pacific.

You’ve pretty much nailed it, imho. In fact, I expect to see some [del]blackmail[/del]requests for aid from China damnsoon.

[rbroome]

@ITR_champion

I’ve been reading articles by professionals about the upcoming financial disaster in China for the last couple years. Not clueless speculations posted by anonymous internet users, but real articles by experts at Bloomberg and other such places. (Of course some may charge that the experts at Bloomber and other such places are no more reliable than anonymous internet users. But I digress.) There seems to be rising concern among people in the know that China is on the wrong track and heading for a meltdown, for exactly the reasons that you list. They’ve been building too much of all kinds of things. Not just houses, but malls and factories and so forth. The government has also sunk billions into impressive but mainly useless projects such as the Olympics, super-high-speed rail, skyscrapers, and so on. All of it is being financed by high levels of debt all over, which can’t be sustained in the long run. Sooner or later it has to come crashing down, just as it did in America and Europe.

Further, it’s worth remembering that China is still more communist than capitalist, so the government controls more of the total flow of wealth there than here. When the crisis hits, the Chinese will be even more dependent on the government than we were. In order to sustain its economy, the Chinese government will have only one thing to do: sell of the huge store of U.S. treasuries they currently hold. And that will rapidly bring the pain over to this side of the Pacific.

I guess it will be another example of “too big to fail”.