An interesting extended article from Reuters prividng a good summary of the risks China is facing in floowing the same path as Japan:
- China is struggling to wean itself off relying for growth on exports and credit-fuelled investment.
- Economists say that it has left its economy lopsided, with massive over investment in property and industries rapidly losing their cost advantage
- Wages are rising, the return on investments falling
With growth slipping, China’s President Xi Jinping and Premier Li Keqiang seem determined to avoid a U.S.-style financial crisis, complete with widespread bankruptcies and job losses.
Preventing such a crisis though could embalm diseased sectors, stifling efforts to make growth more sustainable and instead create the kind of “zombie” banks and companies that sucked the life out of Japan’s economy, economists say.
Add a population graying faster than Japan’s did, and economists worry China may be attempting the impossible.
Analysis: China risks following Japan into economic coma
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A struggling China is not a positive for Australia nor the AUD, although at 7% growth Australian mining exports will continue to tick over.
