If the Chinese dont stop saving and start spending we are all in serious trouble. Domestic Consumption in China must rise or our financial system will collapse. China's surplus of labor and acceptance of lower living standards is what got the West into trouble in the first place. The surplus is gone, and now they need to spend because the American consumer is tapped out. There are no more growth engines in the world. Its up to the Chinese to consume but what do they do with their money? They save it or buy property. Bastards.
They must begin to consume which will take time, we can probably muddle through another ten years or so, if Japan's Debt to GDP is 200% and the US is 100%, there is time.
Question is how can China's gov't remain legitimate when 1.3 Billion People need or begin western style consumption
somethings got to give here
What I understand.
The average income per capita is around $4000 but the Chinese still export $400bil of their savings each year.
Also, a Queenlander said the Chinese demand for coal went from 24% to 50% of world supply over the past 20 years.
To understand how OZ, Canada, Brasil and S Africa become winners in China's GFC stimulus, look at the scale of what China did, pumping in a massive $2.6tri into her $4.5tri economy in 2010. Some people think the Chinese have accumulated credit of 140-170% just to restart growth after their own devastating GFC fallout.
When the property and tie-gong-li* capex bubble burst, the rest of the world will cry, everyone seems to hope China will continue to pick up the slack in growth.
By the way, funding for investing in all these come from loans used to purchase commodities, vendor financing, etc and second, third and fourth loans are obtained from these warehousing receipts and "assets".
Americans know that they cannot depend on Chinese consumers and are trying to create perpetual loans. Yes, loans that never need to be repaid, thanks to the dollar hegemony.
But the Chinese will survive, if they do the right thing and redistribute their resources properly. The changeover of their leaders appears to be delayed.
* railways, roads and airports
I combined a quote from a doctor and an economist and came up with this. "No growth is perpetual, because we have no new Earth to grow into, and we have only discovered one perpetual growth, and that is a cancer growth "
--> Forgot to conclude earlier.
China will probably not able to command a lot of domestic consumption demand because their good party comrades have spent all the future money. Just like Japan, USA and Europe, too indebted with bad debts.
Western democracy is also flawed in that the brain dead, the retarded, the incapacitated and the useless get a chance to caste a vote. As a result you get a country like Australia, run by complete cretins who sound like they failed in a Kath and Kim audition
If you think about it, it is all about greedy people making use of various systems, not just western democracies. Just that in western democracies, you can see the problems, but no solution. In places like China or Singapore, even the problems are hidden. So, there is no solutions.
Can you suggest a better system?
