Monday, May 14, 2012

China crashing?


It looks like China might be contracting. Now granted, it is an op/ed piece written by a company with an American centric view; however, it makes a few good points.  a) The electrical consumption of the nation isn't even above 1%, and electrical consumption generally outpaces inflation. b) This is around the time Chinese companies would gear up for christmas season, however output remains stagnant. And c) If the Chinese economy is contracting then there isn't much the chinese government can do.  The chinese state run banks are already swollen with Yuan from the last stimulus they enacted, which was much larger than the U.S when taken as a percentage of the countries GDP, meaning that any short term benefit that would be accrued will be minimal at best because of diminishing returns.  If Gordon Changs predictions re correct, then we might be entering the 2nd round of this economic roller coaster.

2 comments:

  1. We also cannot fully trust Chinese economic statistics either. This type of information is kept well disguised and who knows what the real truth is. The Chinese also have massive debt overhang from SOs and local governments.
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Seattle resident whose real name is Kevin Daniels. This blog covers the following topics, libertarian philosophy, realpolitik, western culture, history and the pursuit of truth from the perspective of a libertarian traditionalist.