Thursday, May 15, 2014

China, When Construction Grounds To A Halt

This is a great article I read: It talks about the looming event of bursting the China bubble. The bubble economy is currently being inflated to a humungous size by the seemingly incessant construction activities happening all over the country. As the article suggests, the construction will stop at some point, perhaps in a little over a decade from now. And when it grounds to a halt, demand for cement, rebars, and other construciton inputs will drastically fall, taking down with it employment and the buying power of the common people, among others. The whole thing then implodes; growth rates will nose- dive while prices inflation will kick-up, hyper-inflation style.

China should try to cool down a little. Taking the speed down little by little, so the economy can grow in am uch more steady and manageable pace, allowing the multiplier effects of the construction boom to permeate the segments of the economy.