Is China Hollow? (loans, percentage, limitations, creditor)

[Tightwad]

Yes, China's collapse is inevitable due to a gov't and people that do not understand free market trade or simple civil rights or capitalism.

This story is just one of many that are all over the net and in print.

"THE COMING COLLAPSE OF CHINA by Gordon G. Chang Random House, $25.95

THE BUSH ADMINISTRATION IS seeking an enemy abroad, and China has obliged. The bluff and bluster of Beijing during the recent spy plane flap gave American conservatives running room to advocate a return to Cold War-era policies. But no sooner had Donald Rumsfeld's Pentagon announced that the United States was cutting off military ties with China than the Bush White House backed off the order and, in the meantime

, continues to lobby Congress in support of increased trade with China. In the collision between commerce and confrontation, the businessman continues to win out in the GOP. "

THE COMING COLLAPSE OF CHINA. - Free Online Library

[baystater]

Ok. So China is another bubble and they will eventually collapse.

My questions are these.

1. How does that effect U.S. short-term?

2. Long term?

3. And if they go bust. Who will help fund the U.S. debt? Since we don't seem to be slowing down borrowing as of yet.

[wheelsup]

China has billions in surplus trade deficits every year. They will not collapse. What WILL happen IMO is an expansion of their consumerism as the Government builds out infrastructure. China will continue to get bigger. The only thing holding them back is a lack of raw materials, but they are securing them on the cheap in this economy.

[texdav]

Yes there is no way china is going to collapse. if anyone does it more l;ike tpo be su ro some toher western nation. Rememebr that even in this recession worldwide they have a growing GDP and they are fiancing most of opur spending. When its thourgh none will recognise the chinese governamtn because they are going more and more capitalist as the old leaders dieout.While at teh same time are going more and more indebt ;having less people supoort our government and infrstructure. Before long we will look like the opressed scoiety more like live stock being feed our daily rations by the owners of our votes.They will be the owenrs of wealth. i am just glad i wouldn't be here. If I were in my 20's i be very worried about vcoming changes.

[drshang]

Let me clarify some points and respond to some others

First of all, Japan has always saved lots of money and been cash rich and they had a 15 year recession. Japan also had a huge asset bubble burst and it did NOT collapse either.

I also don't think China's problems will lead to a collapse of the country either. That is WAY overreactionary. The problem China has is they need to depreciate their currency to keep export costs low (which is part of why they have a trade surplus) and if they continue to depreciate their currency it will cause a very high inflation rate and will cripple the lower classes and increase the cost of goods produced, since wage inflation will occur. I think you will see some of the "low cost advantage" of China be shifted to other countries.

But let's be realistic. China is not going away. There is a difference between unsustainable growth/hangover and collapse. A ton of infrastructure and intellectual capital is already there and there are very significant switching costs for many businesses to switch to another low cost producer, and risks attached as well. They just have a long way to go before they are at the same level as the other rich countries. Other countries have been where China is and never quite materialized into rich country status. Some have.

IMO China will almost certainly have pretty severe growing pains at some point. Predicting collapse is a whole different ballgame.

[baystater]

Originally Posted by wheelsup

China has billions in surplus trade deficits every year. They will not collapse. What WILL happen IMO is an expansion of their consumerism as the Government builds out infrastructure. China will continue to get bigger. The only thing holding them back is a lack of raw materials, but they are securing them on the cheap in this economy.

Originally Posted by texdav

Yes there is no way china is going to collapse. if anyone does it more l;ike tpo be su ro some toher western nation. Rememebr that even in this recession worldwide they have a growing GDP and they are fiancing most of opur spending. When its thourgh none will recognise the chinese governamtn because they are going more and more capitalist as the old leaders dieout.While at teh same time are going more and more indebt ;having less people supoort our government and infrstructure. Before long we will look like the opressed scoiety more like live stock being feed our daily rations by the owners of our votes.They will be the owenrs of wealth. i am just glad i wouldn't be here. If I were in my 20's i be very worried about vcoming changes.

Originally Posted by drshang

Let me clarify some points and respond to some others

First of all, Japan has always saved lots of money and been cash rich and they had a 15 year recession. Japan also had a huge asset bubble burst and it did NOT collapse either.

I also don't think China's problems will lead to a collapse of the country either. That is WAY overreactionary. The problem China has is they need to depreciate their currency to keep export costs low (which is part of why they have a trade surplus) and if they continue to depreciate their currency it will cause a very high inflation rate and will cripple the lower classes and increase the cost of goods produced, since wage inflation will occur. I think you will see some of the "low cost advantage" of China be shifted to other countries.

But let's be realistic. China is not going away. There is a difference between unsustainable growth/hangover and collapse. A ton of infrastructure and intellectual capital is already there and there are very significant switching costs for many businesses to switch to another low cost producer, and risks attached as well. They just have a long way to go before they are at the same level as the other rich countries. Other countries have been where China is and never quite materialized into rich country status. Some have.

IMO China will almost certainly have pretty severe growing pains at some point. Predicting collapse is a whole different ballgame.

Would you say that the future of china and america will be similar to what neil ferguson put forth with the idea of chimerica?


YouTube - China, the U.S. and the Economic Crisis - Niall Ferguson



YouTube - Conversations with History - Niall Ferguson


Watch the two-hour THE ASCENT OF MONEY | The Ascent of Money | PBS

[Chango]

Originally Posted by Fat Freddy

Why would anyone expect the economy or the political and social structure to be any better than the goods that are produced there?

"Made in China" means inferior junk and that holds true on all levels.

That never was a very sustainable business model...

[Chango]

Originally Posted by wheelsup

China has billions in surplus trade deficits every year. They will not collapse. What WILL happen IMO is an expansion of their consumerism as the Government builds out infrastructure. China will continue to get bigger. The only thing holding them back is a lack of raw materials, but they are securing them on the cheap in this economy.

Originally Posted by texdav

Yes there is no way china is going to collapse. if anyone does it more l;ike tpo be su ro some toher western nation. Rememebr that even in this recession worldwide they have a growing GDP and they are fiancing most of opur spending. When its thourgh none will recognise the chinese governamtn because they are going more and more capitalist as the old leaders dieout.While at teh same time are going more and more indebt ;having less people supoort our government and infrstructure. Before long we will look like the opressed scoiety more like live stock being feed our daily rations by the owners of our votes.They will be the owenrs of wealth. i am just glad i wouldn't be here. If I were in my 20's i be very worried about vcoming changes.

China won't collapse becase their government has huge intervention powers and no qualms about taking out dissenters. There is also a built-in culture that considers the government as the ulimate father figure and no competing institutions like religion or special interest groups to challenge it. The Chinese people could not put together any realistic opposition.

[sponger42]

I think this is a pretty fair assessment:

Analysis: Income gaps, corruption fuel China riots - Yahoo! News

I don't believe that China is going to "go away" but after seeing the signs of the wheels coming off, I have serious doubts about the articles that cite China's economy becoming the largest in the World by 2027 "AT THE PRESENT RATE OF EXPANSION" simply because the present rate of expansion appears to:
1. Be overstated by government influence on reported numbers.
2. Be unsustainable at whatever rate it is ACTUALLY occuring as the cities drown in yellow clouds of smog, infrastructure built with unregulated substandard materials crumbles, and ever-increasing corruption sucks away a greater and greater portion of the capital which should go to keeping the expansion cycle going.

It appears that China is headed for a very sizable "correction" which will likely translate into a depression when the overheated unregulated economy hits the wall.

Does anyone believe that a correction is not coming in the Chinese markets? Anyone have any guesses as to when it will/will not hit? I would guess within the next 2 years just going from what I personally witnessed.

[Tightwad]

Originally Posted by sponger42

I think this is a pretty fair assessment:

Analysis: Income gaps, corruption fuel China riots - Yahoo! News

I don't believe that China is going to "go away" but after seeing the signs of the wheels coming off, I have serious doubts about the articles that cite China's economy becoming the largest in the World by 2027 "AT THE PRESENT RATE OF EXPANSION" simply because the present rate of expansion appears to:
1. Be overstated by government influence on reported numbers.
2. Be unsustainable at whatever rate it is ACTUALLY occuring as the cities drown in yellow clouds of smog, infrastructure built with unregulated substandard materials crumbles, and ever-increasing corruption sucks away a greater and greater portion of the capital which should go to keeping the expansion cycle going.

It appears that China is headed for a very sizable "correction" which will likely translate into a depression when the overheated unregulated economy hits the wall.

Does anyone believe that a correction is not coming in the Chinese markets? Anyone have any guesses as to when it will/will not hit? I would guess within the next 2 years just going from what I personally witnessed.

Yes, its' as they say......"What goes up must come down" so it is with China. However, when the bottom falls out in China the rest of the world will feel the pain too.