Paul Krugman on China's Economy

choi

Paul Krugman, Will China Break? New York Times, Dec 20, 2011.
http://www.nytimes.com/2011/12/1 ... ina-break.html?_r=2

"exhibiting all the classic signs of a bubble * * * Now the bubble is bursting

"I’ve been reluctant to weigh in on the Chinese situation, in part because it’s so hard to know what’s really happening. All economic statistics are best seen as a peculiarly boring form of science fiction, but China’s numbers are more fictional than most. * * * Still, even the official data are troubling

"as the consumer share of the economy declined, China increasingly relied on trade surpluses to keep manufacturing afloat. But the bigger story from China’s point of view is investment spending, which has soared to almost half of GDP. The obvious question is, with consumer demand relatively weak, what motivated all that investment? And the answer, to an important extent, is that it depended on an ever-inflating real estate bubble.

"And there was another parallel with U.S. experience: as credit boomed, much of it came not from banks but from an unsupervised, unprotected shadow banking system. There were huge differences in detail: shadow banking American style tended to involve prestigious Wall Street firms and complex financial instruments, while the Chinese version tends to run through underground banks and even pawnshops. Yet the consequences were similar

Note: crack-up (n):
"1: CRASH, WRECK <an automobile crack–up>
2a : a mental collapse : NERVOUS BREAKDOWN <his wife's death brought on his crack–up>
b : COLLAPSE, BREAKDOWN"
www.m-w.com


-----------------------------Separately
(1) David Jolly, Saab Files for Liquidation After GM Balks at China Deal. New York Times, Dec 20, 2011.
http://www.nytimes.com/2011/12/2 ... ;sq=saab&st=cse

My comment: Except the title, there is no need to read the rest.

(2) 前美中贸易委员会会长:中国应持续改革. VOA Chinese, Dec 19, 2011.
http://www.voanews.com/chinese/n ... orm--135882618.html
(柯 白  Robert KAPP)