Some experts say the economic bubble in China is going to make ours look like a mere hiccup.
A couple weeks ago the internet was abuzz about photos of entirely empty Chinese cites the government had built just to prop up the appearance of a rapidly growing economy. Now here’s more evidence – the New South China Mall in Dongguan, which has been empty for six years.
DailyReckoning.com has the depressing details:
Once heralded as “the largest mall in the world, bustling with customers,” the mall is now overwhelmingly desolate, just “floor upon floor of emptiness.” This is even on a Saturday, and even with a fully-operational theme park. The best way to boost foot traffic? Expand another 200,000 square meters, according to the mall’s owners. They plan for the development to ultimately reach over one million square meters of residential and retail space.
It’s already been about six years since the nearly-vacant mall opened … things are bound to turn around any day now.
Hedge-fund manager Jim Chanos, who foretold the collapse of Enron, says that China is on a “treadmill to hell” because it’s relied on real estate development to underpin its economic growth.
We read last week that China is bailing out the collapsed economies in Europe. So who bails out China when its economy collapses?
This post was last modified on January 18, 2011
View Comments (27)
Interesting. I am sick of China already. I am going to be having some serious attitude problems with China when it comes collecting for its money. All of its desire is to be DEVELOPED, I saw the boring press conference where he kept refering to China as developing and US as developed as if it is time for the US to step down in order for China to step up... familiar socialist crap. I got to tell you China can kiss my luscious black behind.
Whatever happens... happens...
Hmm, they say "the market" has something to do with the success of a gigantic mall. Interesting theory.
I think anyone can see the similarities between the mall-president's plan and our president's plan.
Mall president's plan- "We have tons of empty space that makes no money, but i think that if we make more empty space we can start a boom in sales/customers."
Obama's plan- "We have tons of deficit, but I think that if we spend more money we can start an economic boom."
If anyone can explain this way of thinking, please do tell.
Without wishing to conclude the question of whether it is, or is not, an effective strategy, stimulus spending is entirely conventional national economics world wide and has been for a long time. everyone did it over the last few years. Congress supported it, too, so it isnt just the President's baby.
The rationale is that by borrowing from future output, current activity can be maintained at a level where recovery can be effected over time without the real, human, personal problems of large scale, long term unemployment. that is a a sort of problem which is best understood after having been large scale, long term unemployed. many are, and if you speak to them, i think you will find they are quite pleased by the idea of society at large foregoing some dry economic efficiency for the sake of making life bearable for a lot of people caught on the wrong side of the cyclical downturn.
"...So who bails out China when its economy collapses?"
The Americans will...and the rest of the world that wants cheap products (now available with antifreeze & lead...no extra charge!). As long as China continues to manipulate its currency by devaluing it and as long as the US has cretinous clowns in DC making policy and spending like there's no tomorrow, we will be China's bitch for generations to come. When China destroys and devours the globe through willing (at first) negotiations with countries for their natural resources, then through force, will the rest of the world look to the USA again after a long absence, but it will be too late. It's probably already too late even if the US pulled their head out of the sand.
Someday I can tell my grandchildren what America used to be like and that I did my best to try vote for the people that would reverse course on this death spiral we're in.
I hate to think that in 10 years we will look back on these times as 'the good old days'. I really do hope I'm wrong.
Percentage-wise, China has an aging population much larger than the US and in a decade will start to become overwhelmed by them. Hopefully, they won't have enough time to build a military sufficient to challenge America. The best thing the US could do to help bring about China's downfall would be to cultivate a relationship with Vietnam and shift to buying our cheap junk from the Vietnamese instead.
True but their demographic bulge is about a decade younger than ours, though more sharply defined.
My guess is that a similar fate awaits both nations unless there is a war that destroys either nation or other competing nations.
There are many parallels to the 1930s already.
Debt overhang leading to deflationary collapse? Check
Political posturing leading to trade war? Check
Currency devaluation? Check
Actual trade war? Sorta...Bernake and developing world are in a game of inflationary chicken right now. We'll see how that goes. Half-Check.
Social upheaval? Looks that way so far. half-check
Masses of pissed off, hungry proles ready to blame a scapegoat? Sorta, watch out mexicans. half-check.
All out war? Not yet.
There is one unique facet today vs the '30's. What happens if the Chicoms are dumb enough, or arrogant enough, to nationalize all of the US owned plants in the PRC? If they think we are taking steps to slip the noose or default on the debt they just might.
Of course, it would be the best thing in the world for the US, we could instantly default on the debt in retaliation. Store shelves would be short on trinkets and sporting goods, Walmart stock would crash (boo frickin' hoo). But within 6-9 months we would start seeing US manufacturing plants coming back on line. Damn, I wish they would do this.
"...Store shelves would be short on trinkets and sporting goods, Walmart stock would crash (boo frickin’ hoo). But within 6-9 months we would start seeing US manufacturing plants coming back on line. Damn, I wish they would do this..."
I'd love nothing more than to see great clothing made in the USA again...I am so sick of crappy clothing made with even poorer quality textiles.
The only down side is that China has been secretly beefing up their navy and military for a long time...(thanks to the USA buying all the crap made there that we just can't live without). Plus, each year there are 10 million Chinese men that reach military age and there are 315 million that are ready or fit for military duty. So if it ever came to that, what really matters is who has more nukes and who is faster at pushing a button.
Agreed. My mom was a shift super at a small garment factory. She could make a shirt for me out of scraps during one coffee break. Great fit, great quality, now, admittedly the fabric was sometimes uh hem, floral, but it was the '70's after all.
Their military build up is only a secret to those who rely on the state media. Thank you Billy Clinton for getting them satellite tech from Hughes and super computers.
Our only hope of survival will be if the people of China rise up against their masters and form a democracy or republic, cases of two such political systems going to war with one another are very, very rare.
@DJ, YT, toocoldinwa, Just Al
Wow, there are some really excellent points here. I would like to add a few, they may not be really excellent as well, but I think they are worth noting.
The population crisis facing China is no doubt due to the one child policy. This policy has also led to (for a really horrific reason) a lot more men than women. Men that are now in the prime baby making age. These guys are gonna be frustrated. Who knows how that will pan out.
Decreased population means a shrinking of the labor force. Making it more valuable. Meaning an increase in wages . . . under a free market. Which is something that China does not have . . . but the fact that they will not be able to produce as much still means a general increase in cost of product because supply will diminish as demand increases. That is assuming, of course, that the world will be in a position of enough wealth for demand to continue to increase. It is like the old joke . . . "assume a can opener".
During the height of Stalinism it was clear that the subjects of the Soviet Union did not experience a quality of life anywhere near what the rest of the contemporaneously modern world did. Stalin explained this disparity as -not a failure of communism- a fact of the SU still being in a phase of expansion that had not yet attained true communism and because of the evils of capitalism across the world.
Of course China must be experiencing something similar -internally. If the state propaganda teaches the value of a classless, egalitarian, communist society and the decadence of the bourgeoisie in the west then it won't be too difficult for the overworked slave laborers to make the connection that they are most decidedly in a class system that has turned them into serfs for the decadent west and -worse- the quasi industrialists in their own country.
Just remember that the only rapidly growing part of the Chinese economy is it's military...we virtually bankroll them...and have been for a long time now.
you're exactly right - and the only recourse they will have when they do collapse -- war.
on't tread on m (sic)
Touche. Darn those gravatar limits!
:)
And barry and company are going to lay back and get boned by china and the yuan is going to be the reserve currency-that is how china will prop itself up-by holding hostage every international financial transaction on earth. And we are going to allow it-at the behest of china and the UN, ah NWO, ah, UN-whatever they are called this week.
IHTM.com asks, "So who bales (sic) out China when its economy collapses?"
China tries by seizing the vulnerable Middle East oil fields... somewhere in the near future, perhaps???
Psalm 83; Ezekiel 38-39; Revelation 9:13-16; 16:12
Why seize them? They're already going around the world buying up every natural resource they can from people dumb enough to accept US dollars.
Their new economy will involve buying up everything not nailed down here in the USSSA.
Damn you and your ability to spell.
Just having fun. You guys are the best.
ummmm (sic) Chuck? Any chance you can summarize your random choice of scripture to actually make a point? Cuz (sic) I'm not gettin (sic) it.
Nice post, Ted... did someone P (sic) on your supper?
YOU GUYS ARE SIC! (sic)
Socialism will fail invariably. It's just a matter of how long the misery is going to last before it happens and just how long the misery lasts afterwords. And if China does become the preeminent power in the world it could very well be a good thing for the USA. We can rebuild ourselves without worrying about being the savior of the world. The world can learn what real imperialist aggression is. And China can go bankrupt trying to run everything on an economy type that comes stamped with an expiration date.
"We can rebuild ourselves without worrying about being the savior of the world". Kudos Kip albeit too commonsensical. Why does sensical get a (sic) and commonsensical not? Why is using sense and rational thinking get degraded by the necessity of the word common to make sense? Just wondering.....
@Ted
Interesting question about sic and sensical (wow almost sounds like a Jane Austin novel). Although I think the only time that sensical or nonsensical qualifies for a "sic" is if it is a verbatim transcription. "Sic" is a way of sorta saying "hey I know that it's wrong, but don't blame me . . . I'm just reprinting what some other idiot wrote. I learned that from the internet. Which is, strangely enough, comprised of a lot of things that idiots wrote.
I can't claim to be to much of a fan of the phrase "common sense" either. To me an item's worth is generally pegged to not only its usefulness but also its scarcity. In this manner common sense is the the least valuable of all the senses.
Oh yes, and I really hate the term "street smart". What does that mean? You are some sort of civil engineer? You know the names of a lot of intersections? You never get caught on the wrong side of S.Exchange Street? I don't know. It bugs me.