Li Zoujun, an economist at
the Development Research Centre of the State Council, recently made a
report, presumably at an internal meeting, which predicted that China could face an economic crisis in 2013.
The full report in Chinese can be read here.
We are not going attempt to summarise the whole report as it is quite
lengthy, except that for some of his rationale for his somewhat
apocalyptic predictions. Majority of what he said does not seem very
surprising. The only surprising thing about such a report is just that
it is made by someone from the State Council who said it, not any
Westerners or Western media who were allegedly talking down China.
The causes of this economic crisis are, first of all, a burst of real estate bubble and local government debts crisis.
The second
is external, namely that hot money and capital inflow over the past few
years fuelled the bubble within China (then he blames “foreigners who short China”). As capital might flow the other way when the economy slows, it will cause troubles for Chinese government in dealing with it.
The third
is political: as this year is pretty much the final year for the current
government’s term, its job in the remaining months would be to hope
that everything is stable. But let’s say the economy
get pass the leadership transition without any troubles, the next
leadership will face two choices: either to sustain the bubble for now
and create a bigger problem in 2015 /16, or let the bubble got bust. Of
which, he endorses the second choice.
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