China is going to slow, much more than anyone thinks. The commodity producers and commodity producing countries like Australia and Canada will take a hit. In contrast, the US, Japan, and Europe will benefit from falling oil prices. However global trade in general will slow, as will employment, and corporate profits.
We are starting to see a global growth slowdown already. When China joins the siesta, the slowdown will accelerate.
The pertinent question now is whether or not the market forces China's hand before the Chinese leadership change next year. I think it is possible, however a sustained drop in oil and commodity prices might be enough to forestall such an event.
Regardless, the markets will likely react in advance of that slowdown, whether forced by the markets or by plan of China's new leaders.
Will China Have a Labor Shortage, Sending Inflation Out of Control?
Andy Xie: Chinese Real Estate Prices Will Drop By 50% In 3 Years
Andy Xie: Chinese Real Estate Prices Will Drop By 50% In 3 Years
Independent Economist Andy Xie has been a China bear for some years now, so long that as if there is no one who wants to listen to him again. Well, at least I will still first read about what he said before dismissing him.
In the Lujiazui forum, he told Sina finance that real estate prices will drop by 25% by the end of this year, and 40-50% in three years. Yet he thinks the banking sector will not be hurt much even with 50% of drop. This now echoes the view by Guo Shiping, a professor in Shenzhen University, that real estate prices will drop by 50% for 5 years.
The curious thing, however, is that he doesn’t think that the Chinese economy is overly relying on the real estate market, so he actually thinks that real estate prices dropping 50% will not fatally hurt the Chinese economy, and the banking sector can survive the crash.
Power vs. Profit
Balking at the high price of coal that fuels much of China’s electricity grid, the nation’s state-owned utility companies are defying government economic planners by deliberately reducing the amount of electricity they produce.Why Hedge Fund Titan Jim Chanos Is Wrong About China
The power companies say they face financial ruin if the government continues to tightly limit the prices they can charge customers, even as strong demand is sending coal prices to record levels. The chairwoman of one giant utility, China Power International, recently warned that one-fifth of China’s 436 coal-fired power plants could face bankruptcy if the utilities cannot raise rates.
The utilities’ go-slow tactics include curtailing the planned expansion and construction of power plants, and running plants for fewer hours a day. And in a notable act of passive defiance, the power companies have scheduled an unusually large number of plants to close for maintenance this summer — right when air-conditioning season will reach its peak.
Ponzi Financing Involving Copper Trade Gone Wild In China
Energy Shortages Spreading: Rationing in China, Pakistan, Venezuela, Japan, Argentina; China Resorts to Punitive Prices to Curb Demand
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