Brian Klein tells us a “Great Crash” is approaching China. He differs sharply from both George Soros and Niall Ferguson, who regard US be markedly weakened and China steadily strengthened by the current financial crisis. Brian Klein reminds us that China has a much bigger reliance on foreign markets than what is normally reported, and the shrinking governmental construction in the post-Olympic era will limit the domestic consumption volume to fill the vacuum left by the foreign export markets. Consequently, the financial crisis–causing the foreign markets shrink and the domestic investments drop–will drag Chinese economy down to a deep pit.
Is There a Great Crash Approaching China? Or shall we ask, without the US export market will China survive the financial crisis?
My intuition is China will survive. No matter how the financial crisis is going to be handled, foreign financial institutions will need a place for profit-making investments. Given the record of their investments in the past, it is hard for them to find a better place. Indeed, if there be a single place in the middle of this unprecedented financial turmoil that investors still have confidence to pour their money in, it would be China.These investments will fill in the vacuum left by the Olympic construction budget. As for the foreign export markets, India, Europe, Africa and Latin America will likely have a big increase to make up the shrinking US market. China will survive simply because of its productivity and expanding export markets outside of the US one.
A warning of “Great Crash” of economy will not stop the future investors–most of whom are desperate now, but will soon start to consider their next step–from moving to their last resort. Their haunting fear rather lies in the political instability–a political “Great Crash.” Collectively, these investors need to make sure there is no such “Great Crash”, and in the coming years they will have to invest much more on China’s better governance.
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