About China

Posted: August 7, 2014 in Uncategorized

Well, it has been quite a while that I did not write about China.

With so much happening around the globe, there is no time too write much.

After so many bad news, the Chinese Government again used stimulation of the economy to jump start the situation and, at least in the next 6 month, the situation is looking better (well, unless the real estate sector really shows what it is – but they are good at manipulating).

The issue with this “stimulations” is that they avoid the real issue for a period, but not forever.

China is ina double transition from export economy to consumer economy and from US Dollar pegged currency to alternative to US currency.

Yes China has a lot of reserve currency fire power, but let’s not forget that, to save themselves from the 2008 crisis.

Outstanding credit is 251% of the GPD and the local debt is estimated(probably under estimated) USD3 trillion with an unknown quantity of non performing debt (surely much higher than the stated1%).

President Xi is doing a great job (far better than any Western leader) in cleaning corruption and he is building a statehood around his persona – since in the Party there is so much corruption.

I am afraid that in the next few year the working age population – real estate collapse and export slowdown will hit at the same time.

Add to this the perverse effect of the new environment restriction and clean up of corruption (showing the real figure).

Add the increasing level of awareness of the Chinese, a potential spike in oil due to Russia or Iraq (Iraqi’s oil go mostly to China).

There are literally legions of dangers looming. Even pushing a population to consume more is not exactly easy (still the average Chinese consume almost half than the Western countries).

Yes they have technically (not morally) the best political figure in President Xi, but the more they postpone the crisis with ad hoc stimuli – the more the risk that in the next 10 year they will be engulfed in an unavoidable crisis.

It will be a crisis that even involve the Party and a revolution  or Asian wars spurred by an Imperialistic China 



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