Is Chinese economic bubble about to burst?

[marmar]

Is Chinese economic bubble about to burst?
Published On Fri Mar 12 2010

David Ignatius
WASHINGTON POST COLUMNIST


The bubbly enthusiasm that many analysts express about the Chinese economy reminds me of the old-time variety show host Lawrence Welk, who banished worries each week with soothing sounds from his "Champagne Music Makers."

China watchers should turn off the music and listen to Premier Wen Jiabao, who has been surprisingly frank in warning that overinvestment and lack of domestic demand are producing an economic bubble in his country.

"The biggest problem with China's economy is that the growth is unstable, unbalanced, uncoordinated and unsustainable," Wen cautioned at a March 2007 news conference during the National People's Congress. That comment had about as much effect as former Federal Reserve chairman Alan Greenspan's 1996 concern about the stock market's "irrational exuberance."

Wen again voiced concern last week to the National People's Congress.

"We still face a very complex situation," he said, given the twin dangers of overheating at home and the global recession abroad. He pointed to a "precipitous rise" in housing prices in some Chinese cities and said that because of the danger of overinvestment, "the launching of new projects must be strictly controlled." ..........(more)

The complete piece is at: http://www.thestar.com/opinion/article/778682--is-chinese-economic-bubble-about-to-burst

[theoldman]

1. Every bubble will eventually burst.

Our problem was that we were blind to our real estate bubble, the Chinese aren't. They also recognize that their biggest customer,the US, is almost broke.

[DJ13]

2. and lack of domestic demand

Thats the problem when you set up your economy on cheap labor to grab the export market.

Theres no domestic market when the pay is too low.

[HeresyLives]

3. You live in hopes.

China has a couple of trillion stashed, so there is no point hoping for any bubble-bursting.

[marmar]

4. Who lives in hopes? What are you talking about?

[HeresyLives]

5. Every couple of weeks...faithfully,

somebody claims China is about to crash.

It isn't.

Every couple of weeks...faithfully,

somebody claims the EU is about to crash.

It isn't.

America needs to worry about building itself up instead of hoping others will crash.

[marmar]

6. Umm, okay.

[physioex]

7. I don't think anyone "wants a crash".....

It is something we must all be weary off. I knew there was going to be a housing bubble way back when (read my posts). I knew in the end it would be bad but it turned out worse than I thought.

[HeresyLives]

10. US seems to.

[depakid]

8. Fact is, China is the poster child for overshoot and collapse

[HeresyLives]

11. Fact is, China is booming.

[depakid]

13. That's the overshoot part

collapse comes through unsustainability and is accompanied by degradation of ecological services and resource stocks.

In China's case, this has happened before and its current course follows the same pattern.

[bertman]

9. The Chinese have one major advantage over us. Their leadership can dictate the policy

to be used to correct this--no matter how harsh. They don't have to worry about what the "loyal opposition" says.

[HeresyLives]

12. They have lots of advantages.

They've just decided to use them.