Short China?



China is highly unlikely to suffer a currency crisis like what happen to Indonesia and South Korea during the 1997-8 asian financial crisis due to their massive US treasury holding. But i am concern about their unemployment rate, its potential for social unrest and subsequent implications is very scary.

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4 thoughts on “Short China?

  1. Very true, but with an aging population and a one child per person rule, there may actually be a slow down of production because there won’t be as many workers in the next generations.

    • there is actually a paradoxical relationship between shrinking population and unemployment. Business sees shrinking population as shrinking market. Business therefore become overly cautious with expansion, investments slows down and hiring slows down causing unemployment induce deflation. This is what i think is happening in Japan right now.

      Having said that, there is a caveat, Japans actually have 20% investment as a proportion of their GDP in 2010. Its high by developed world standard. Then again, Japan’s economic model is a bit weird. I am not too sure if comparing its financial numbers with the world can produce any meaningful insight.

    • for now, as their economy develops they will gradually become less depending on export and domestic serving service sector as proportion of their economy will increase, as the result their economy will mostly be depended on their domestic market. Like many large developed countries.

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