Paul Denlinger

Reports Indicate China's Ecosystem Is Too Far Gone to Support a Growing Economy

oneolddude: Has it occurred to you that the difference between China and the US is that China has 4 times the population and only 17% arable land?

And you say that "China will do the same?" Try explaining your logic to China's leaders today. They are not cool about the situation.

Get real.

China: American-style vs Latin-American-style Crises

Another data point is the fact that Shanghai Vanke is lowering prices on Shanghai real estate:
www.chinavortex.com/20.../

And that Alibaba's Jack Ma is taking a very pessimistic tone:
www.chinavortex.com/20.../

A U.S./China Comparison

I spend about 80% of my time in China, and while China has done well so far, it has been because China's economic development so far has been relatively easy. Take strong government control, add foreign investment, get government out of most peoples' lives, and let it grow.

The next stage of growth though will be much more difficult. There are signs that the natives (Chinese population) are getting restless. The environment has been horribly degraded, making many cities barely liveable. China has invested in a transport infrastructure based on cheap coal and oil which was copied from the US in the nineties.

Yes, China has done very well so far, but just as recent events in the US over the past year have shown us, things can turn south very fast, even for the healthiest looking countries.

On China and What the World Won’t See During the Olympics

Thanks for talking about the very real challenges which China faces. Some Chinese officials have a saying: "If China reforms too fast, China will become chaotic. If it reforms too slow, it will die."
The reforms have created huge wealth, but there are severe prices for this prosperity. Now they are becoming more apparent.

China's Impending Financial Crisis

Everything points to the Chinese government not having acted fast/hard enough to stem the capital inflows, and the recent oil price rise and capital inflow restrictions almost seem like panic reactions.

The picture I get is that there will be major steady rises in all commodities, especially food, and price stagnation in real estate. Already there is major pressure on RE developers in China, who are having to live with increasing interest rates and a public which is becoming more wary about investing in housing in the face of rising prices across the board.

In the face of this, it may even become likely that the Chinese government will come down hard on "speculators" who play the yuan rise. The purpose would be to make an example of them and discourage the practice.