Paper Economy - A US Real Estate Bubble Blog: Question(s) of The Day

Monday, November 10, 2008

Question(s) of The Day - China Recession?

Will China see a real GDP contraction?

They are beginning to kitchen sink (sort of… $586 billion stimulus package) their economy at a 9% growth rate yet who says they can’t go negative?

What are the global ramifications of China’s economy actually contracting?

Labels: china, economy crisis, recession

9 Comments:

A hard landing for China is highly likely. My family and friends live in Shanghai area, the slow down of economic activity is dramatic. It's definitely not a good news for US who needs China to fund the reckless consumption.

By jgu, at 10:44 AM
The China infusion is, I think, the tale tell move. We are in a death spiral. Expect something spectacular from the U.S. Soon!
The question is, though, does it really change anything?
I my view it merely shifts the overhang of bad assets to the treasury balance sheet.
It does not miraculously change them otherwise.

static

By static, at 1:35 PM
The property bubble bursting is devastating to China, so much is tied to housing and infrastructure over the past few years, and all those are tightly tied to the export sector (export is collapsing), now the music suddenly stopped, people haven't realized how bad China can get still, it won't end up well. But I do believe China will do much better years from now if we don't see social unrest.

By jgu, at 2:42 PM
Isn't social unrest a certainty?

What will happen if their economy really contracts? ... Doesn't this mean significant unemployment (or the equivalent for a communist country)?

And aren't those unneeded workers very poor...

Seems like a serious blow to an emerging market and possibly an opportunity for hard-liners to strengthen their control.

By SoldAtTheTop, at 4:06 PM
soldatthetop, what I can tell you is there is NO communist in China now, none. The communist party is a misnomer, rather I'll call it a special interest group. The Chinese leadership has a good vision, but because it's not a democracy, the execution is very poor. I'm concerned about the social unrest, not only because a lot of people will lose jobs (they can go back to farm), but they have seen what kind of life the special interest group is living (so luxury ordinary Americans can't even imagine).

By jgu, at 4:41 PM
jgu,

But aren't there still major problems with power and representation.

Its not a democracy... how are interests represented so participants at least feel they have some say in the country's direction and are not just a labor unit?

Aren't they in for a rude awakening when many millions of workers are no longer needed and their prosperity slides?

By SoldAtTheTop, at 5:31 PM
China will be fine. Why? Because wages there are so elastic.....they can cut wages in half and what can people do...nothing...that is what.

By Anonymous, at 10:46 PM
China is effed if the west can't afford to buy the stuff they make. They are a capitalist dictatorship, the only one ever, as far as I know. Their history of human rights abuses and repression of freedom seems to imply that "civil unrest" may not be a bad thing in the long run.

By Phil, at 9:32 AM
I toured China 2 years ago and noticed that it wasn't what I considered Communist (commericial consumerism EVERYWHERE!).

I asked a local tourguide if they still consider it a Communist regime. He said "Black cat, white cat, it catches the rat."

By garbler, at 11:24 PM