Yiwu,
Have you read these two articles[below] from the STRATFOR site? I'd like to hear your take on their take. Here are some excerpts along with the URL's to the same. Thanks for sharing your thoughts on the situation in China.
"One effect of this reform will be to slash available credit in the countryside, where, paradoxically, China hopes massive growth will lift the it out of trouble. Obviously this is not going to happen. Instead, China, which had thought itself immune from the international currency crisis because of centralized currency controls, is now realizing that its controls were a fantasy. Borrowing off the books was massive and can't be measured even today, either in its domestic or foreign guise. As a result, China is concentrating power in Beijing after the damage has been done. Since China does not have a convertible currency, there will be no currency crisis. There will be, however, a dollar denominated credit crunch in which enterprises in China fail to meet official and unofficial debt obligations, overheated domestic investors are devastated by defaults and business bankruptcies, and the free market is rolled back as Beijing tries to cope with the wave of resulting unemployment. In the end, the new China will look more and more like the old China. "
stratfor.com
-AND-
"Emblematic of China's confusion is this: A day after Chinese leaders called for increased market discipline, Huang Ju, a member of China's Politburo and leader of Shanghai, met with Raul Castro. Ju Jintao of the Central Committee, said that he was deeply impressed with the Communist Party of Cuba and the fact that the Cuban people strictly adhere to the Socialist road. Said Ju, "China admires the nation's success."
This is not mere public relations. China is a profoundly confused nation that genuinely wants to be both communist and capitalist. This, coupled with China's looming economic crack-up, is a recipe for political chaos. We recognize that we will be called alarmist for this analysis. However, we will happily compare our past forecasts on Asia with those of our critics. We no longer believe that China can avoid the choice between central dictatorship or chaos. Moderate liberalization is no longer an option."
stratfor.com
Craig |
