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An opinion about China to frighten Australians

April 30th, 2014

It is only an opinion so let’s hope it’s wrong:

30-04-2014 chinaopinion

But then, London’s Financial Times is no tabloid scare monger.

Just another little something to think about when studying all those budget forecasts and projections out into the distant never-never on Tuesday week.

Prasenjit Basu is founder of RealEconomics.com, an independent economic research firm. His rather frightening conclusion:

In a country that already accounts for half of all capital-intensive production globally, and nearly a fifth of all US imports, the growth of manufacturing will inevitably slow. A thriving service sector could pick up some of the slack. But building more houses and railways is not the way to encourage it.
China’s economy is in an unbalanced state. It can stay that way for some time – but the longer it does, the worse the eventual outcome will be. The industrial sector is already plagued by falling prices. To avert a wider deflationary spiral, the country needs to wean itself off the false cure of perpetual policy stimulus.

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