As readers of The Frost Report know, it is my belief that the Chinese economy is a sinking ship bound with incredibly large anchors.
Due to crafty government intervention, the carnage has been delayed for a remarkably long time, and continues to defy gravity to an amazing extent. Nevertheless, the craft is now sinking below the waterline.
What always amazes me about the Chinese government is that - completely unlike the cryptic Federal Reserve in the US – they are remarkably honest and straightforward regarding economic issues. For example, they famously call the real estate market “the housing bubble.” They say that the large volume of private loans (issued to businesses who couldn’t get loans from banks) is a “severe threat to the Chinese economy.”
This week added some new examples of brazen honesty. The Chinese Ministry of Commerce said that China’s slowing exports and growing imports are “quite a grim situation.” Imagine Ben Bernanke saying that! In regard to real estate, several sources - including the National Bureau of Statistics - noted that housing prices are falling in many major cities, and that the situation will probably worsen since the homes are still largely unaffordable!
Whoever loses all their wealth in this debacle (and there will be many) cannot say they have not been warned - over and over.
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"We'll unswervingly stick to controlling the property market without changing the direction or loosening the policies."
Zhang Ping, head of the National Development and Reform Commission, Aug 2011
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Due to crafty government intervention, the carnage has been delayed for a remarkably long time, and continues to defy gravity to an amazing extent. Nevertheless, the craft is now sinking below the waterline.
What always amazes me about the Chinese government is that - completely unlike the cryptic Federal Reserve in the US – they are remarkably honest and straightforward regarding economic issues. For example, they famously call the real estate market “the housing bubble.” They say that the large volume of private loans (issued to businesses who couldn’t get loans from banks) is a “severe threat to the Chinese economy.”
This week added some new examples of brazen honesty. The Chinese Ministry of Commerce said that China’s slowing exports and growing imports are “quite a grim situation.” Imagine Ben Bernanke saying that! In regard to real estate, several sources - including the National Bureau of Statistics - noted that housing prices are falling in many major cities, and that the situation will probably worsen since the homes are still largely unaffordable!
Whoever loses all their wealth in this debacle (and there will be many) cannot say they have not been warned - over and over.
____
"We'll unswervingly stick to controlling the property market without changing the direction or loosening the policies."
Zhang Ping, head of the National Development and Reform Commission, Aug 2011
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See also:
August sees property prices fall in China
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