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What this article is saying is that in the future, I'm guessing 2 to 5 years, China could see a credit bubble and misguided investments. If you're an economist
by asdlfj2sd33 17y ago
What this article is saying is that in the future, I'm guessing 2 to 5 years, China could see a credit bubble and misguided investments.
If you're an economist this is obvious. And as the article states, the Chinese leadership knows it as well. They had been tightening credit before the recent downturn.
Therefore it is a very reasonable assumption that China will start tightening again in 2 to 5 years when the global economy recovers.
In other words, this article gives no new or insightful information.
- tokenadult 17y agoYou are correct that the author argues that restrictive government policies ameliorated some of the effects of very low interest rates. But on a close reading of the article, even this author, who seems to think government control of the economy is doing very well so far, concedes that there is already "misguided investment."
- cwan 17y agoPrivate Chinese firms are already complaining that they're being squeezed out by their state owned counterparts (who are getting the bulk of the bank financing and government stimulus funds): http://www.chinastakes.com/2009/8/china-stimulus-plan-criticized-for-crowding-out-private-sector.html http://www.chinastakes.com/2009/8/china-stimulus-plan-critic...
- gscott 17y agoThey have the assets to backstop the debt bubble they are creating but what I am hoping is that it puts the US and China back on an even level since all of there foreign reserves will have to go to the debt or they will have to inflate the yaun taking away some of the advantage they have now.