In the article "Massive Inventory Build-up in China Troubling for the Global Economy," Sasha Cekerevac, contributor to Profit Confidential, reports that China's economy has recently slowed sharply, partially hit by the decline in the global economy. With continued concerns for the global economy now being put front and center on an almost daily basis, Cekerevac notes that many hope for a resurgence of China's growth rate. However, Cekerevac warns that there are signs that China's growth rate will continue to decline, putting added pressure on the global economy.
"One of the biggest worries…is that massive levels of inventory are being built up and unsold," says Cekerevac. "It seems as if there is an immense oversupply and a glut of inventory in every industry… If inventory is sitting unsold, this means that there will be lower levels for China's growth rate going forward. The global economy needs to work off the existing inventory."
Cekerevac notes that as the second largest economy, what happens to China's growth rate does have an impact on the global economy.
While the financial authorities are trying to renew lending, Cekerevac notes that domestic loan demand is falling.
"On top of a lack of demand, bad loans held at Chinese banks have risen for the third consecutive quarter," reports Cekerevac. "This is the longest stretch of bad loan increases in eight years."
With the global economy as weak as it is, Cekerevac states that there are no economic signs of a rebound in China's growth rate-which signals that the global economy could plunge into a deeper recession.
Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it "begged" its readers to get out of the housing market...before it plunged.
Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.
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Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi's current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six.