Wednesday, November 07, 2012

A turn for the worse...

These things can unravel quickly.  China is behaving like the Communist Party knows precisely what is coming, and is planning furiously to intercept any form of civil unrest through whatever draconian methods that will suffice.

from AEP of the Guardian:

The contours of China's excess are by now well-known. Investment reached a world record 49pc of GDP last year, a level unseen in other Pacific tigers during their growth spurts. Consumption has fallen to 37pc of GDP, from an already very low 48pc a decade ago.
Negative real interest rates and restrictions on investing abroad forced savings into a housing bubble, pushing home to income ratios to 16 to 18 or even higher in Beijing, Shanghai, Tianjin, and Shenzhen.
As premier Wen Jiabao likes to put it, China's economy is "unstable, unbalanced, uncoordinated and ultimately unsustainable." It is why his allies in China's Development Research Centre (DRC) joined forces earlier this year with the World Bank to warn that the export-led growth model launched thirty years ago by Deng Xiaoping's is now obsolete.
The low-hanging fruit of state-driven industrialisation has been picked. Stagnation lies in wait if the country clings to the dirigiste model. "China has reached another turning point in its development path when a second strategic, and no less fundamental, shift is called for," they said,
"The forces supporting China’s continued rapid progress are gradually fading. The government’s dominance in key sectors, while earlier an advantage, is in the future likely to act as a constraint on creativity."

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