Does China’s
Remarkable Growth
Have Feet Of Clay?
Despite a slowdown China’s GDP growth is still expected to do well compared to other
countries, projected to deliver a relatively impressive seven to eight percent in 2012.
by Dan Watson, Contributing Writer
Blairgowrie Associates
dwatsn@aol.com
Over the past few years much has been said about the amazing economic and industrial growth achieved by China. Let’s be honest, China’s growth has been absolutely remarkable and is the envy of the world. In 2010
China became the world’s second largest economy, exceeded
only in gross domestic product (GDP) by the U.S. Japan was a
distant third, eclipsed by China in 2001 with a repeat every
year thereafter. By any metric that we could use, China’s success over the last three decades has been extraordinary. China’s
agricultural and industrial production both surpassed the dollar value of the U.S. output for 2010. In recent years China has
seen the evolution of a genuine middle class, which has fueled
an unprecedented real estate boom inside China. Last year
there were a number of China pundits speculating that China
would overtake the U.S. in GDP before the end of this decade.
Given the current anemic U.S. economic recovery one cannot
rule out this happening.
As the US continues to amass more debt it is fairly clear that
there isn’t a game plan in place to solve the declining economic
condition or the massive unemployment situation. Although in
recent months the U.S. has seen a slowdown in home foreclosures the overall housing market is anything but healthy. The volume of U.S. home lending dropped 10 percent last year to the
lowest level since 1995, highlighting the current administrations
uphill battle to prop up the still-struggling housing sector. Unfortunately, the drop in lending may be tied to the U.S. Government banking regulations whose requirements have in affect
curbed actual mortgage lending. China doesn’t have this restriction and in fact has cut interest rates multiple times this year to
attract more buyers.
In the past few months we have noticed that Federal Regulators are trying some risky approaches to shore up the U.S. housing market. Just four years after toxic U.S. mortgages brought
the global financial system to its knees and triggered the deepest
recession since the Great Depression, U.S. housing regulators
may be making it easier for banks to make bad loans without
www.coatingsworld.com
October 2012
