Monday, November 30, 2009

Wither the world economy

The cost of China’s excess capacity

This is one of those dry articles that attract few comments here, but strikes me as a profound subject. Since the imbalances China has caused are responsible to a large extent for our current troubles, not least overblown house prices, the question is what will happen now. China's excess capacity is growing, not shrinking. What will this mean for the future? Deflation? Protectionism?

Posted by letthemfall @ 01:27 PM (978 views)
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3 thoughts on “Wither the world economy

  • mountain goat says:

    This can only be sustainable for China if they make sure their currency falls faster than other countries, who must be tempted to put up trade barriers in retaliation.

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  • stillthinking says:

    China is more trouble than its worth. There is obviously no intention to encourage domestic consumption.

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  • cat and canary says:

    ..quite an interesting article buried in the Telegraph today, showing growing protectionism IMO:

    http://www.telegraph.co.uk/finance/china-business/6689905/Chinas-Wen-Jiabao-hits-out-at-brazen-protectionism-in-yuan-row-with-Europe.html

    some quotes:

    Chinese prime minister Wen Jiabao has hit out forcefully at the growing international pressure on Beijing to revalue its currency, describing it as ‘unfair’ and accusing other countries of conducting ‘brazen protectionism’ against China.

    His comments came at the end of a difficult EU-China trade summit at which attempts by European leaders to push China into allowing its currency to strengthen were firmly rebuffed by Beijing.

    “Some countries, on the one hand, want the Renminbi to appreciate but, on the other hand, engage in brazen trade protectionism against China,” said Mr Wen, “This is unfair. In fact, it amounts to restricting China’s development.”

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