For a very bearish opinion on China, check out the translated article from Sentaku Magazine that appears in today’s Japan Times.The Japanese article says China’s economy is on the verge of collapse, and it warns local corporations to look elsewhere for growth.
The first problem in China is an economy dependent on government spending and housing:
It is true that consumption in China has been on the rise, as evidenced by the 18.3 per cent year-on-year increase in the first nine months of this year. This figure, however, was much lower than the 24.5 per cent increase in investments by the government and state-owned corporations in fixed assets.
Another important factor that must not be overlooked is the fact that nearly half of retail sales in China is accounted for by the money spent on housing. The China Real Estate Research estimates that, in 2009, sales of new and used houses were valued at 5.7 trillion to 6 trillion yuan, which represented a substantial portion of the overall retail sales, which stood at 12 trillion yuan.
Next you’ve got the weak profit margins of private companies:
Another factor that has been working against the middle class is the sluggish performance of corporations in the private sector. Since the spring of this year, factory workers have held a series of strikes in many parts of the country to protest low wages. Management cannot afford to comply, however, because a majority of the privately owned enterprises in China are not at a technological level of high added value. So, they are forced to sell a large volume of merchandise at low-profit margins.
Finally there’s the structural impossibility of creating middle class jobs for 720 million farmers. Read the rest at Japan Times >
Where can you find growth? Another article in the Japan Times talks about corporations focusing on Southeast Asia.