Economy - is China the next to fall?

finchy

I've read a few articles recently along these lines:

http://www.telegraph.co.uk/finance/comm ... bites.html

So what does the Cake Stop Committee for Economic Affairs think?

I'd imagine that things could become very, very nasty indeed if the Chinese economy collapsed.

pneumatic

I was in China recently, after a 7 year gap.

I had the same uneasy feeling there this time that I had in the late 80's here. I wanted to say to them:

a/ all this mad consumerism will not make you happy
b/ one day, we will all have to pay for all of this

I didn't say anything because I was a guest and, anyway, experience tells me that they wouldn't want to listen. Just like here, who cares about politics when you can go shopping?

But if the Chinese economy goes over, there will be big trouble, for sure.

Read somewhere recently that, in China, nobody wants to keep up with the Jones's; they prefer to keep the Jones's down below them. :shock:

mr_poll

I am no economist but as far as I can see the Chinese economy has been built on a very healthy export market, given the rest of the world doesnt have a pot to p1ss in and therefore we aint buying that market will surely suffer. Hence why they are trying to fuel internal consumerism. In addition at times like these there is always a push to "buy your own" - ie Buy british, or Buy US which will exacerbate the problem.

There is also some talk about the chinese currency being artificially kept low or high (tbh not sure which) - which all other countries are pressuring them to sort. Although trade sanctions are a long way off if this happens this will also burst the bubble.

MarcBC

I would keep an eye on Portugal if I were you.

Pross

The time they will be in trouble is once inflation dictates that they can no longer manufacture stuff as cheaply as some newly developing country in Africa or South America. Chinese growth has been based on cheap and plentiful labour, now they (well, some of them) are getting a taste of the good life then wage rates could start to spiral.

morstar

Pross wrote:

The time they will be in trouble is once inflation dictates that they can no longer manufacture stuff as cheaply as some newly developing country in Africa or South America. Chinese growth has been based on cheap and plentiful labour, now they (well, some of them) are getting a taste of the good life then wage rates could start to spiral.

The tipping point is approaching. The price advantage has been obliterated but the exports continue to be safe in the short term due to the infrastructure not being in place elsewhere. However, as that situation corrects itself the production will move elsewhere quite rapidly.

Add in soaring shipping costs and closer source of supply is becoming more important.

I think China is safe for the foreseeable future but they will see a cooling of the economy.

daviesee

It may collapse some time but it certainly won't be next.

Europe has some financial jiggery-pockery to do just to stay afloat.

crumbschief

pneumatic wrote:

But if the Chinese economy goes over, there will be big trouble, for sure.

So your saying it could be big trouble in little China,that rings a bell.

Jez mon

Pross wrote:

The time they will be in trouble is once inflation dictates that they can no longer manufacture stuff as cheaply as some newly developing country in Africa or South America. Chinese growth has been based on cheap and plentiful labour, now they (well, some of them) are getting a taste of the good life then wage rates could start to spiral.

[layman's view]

I think it's already happening to some extent...Witness that when focusing on developing economies people talk more and more about the East, rather than just China, for companies looking to move/expand manufacturing, China is no longer the automatic choice. It's getting more and more expensive to manufacture over there, and China doesn't do itself any favors with its lax stance on IP, making it a slightly risky place to manufacture in anyway...

I think fundamentally, China still has a way to go before it bottoms out, there are still plenty of peasants, and whilst that is the case, you have a cheap workforce that can be exploited.

[/layman's view]

spen666

MarcBC wrote:

I would keep an eye on Portugal if I were you.

Are they going to invade China?