China, time bomb?


China is now facing tons of troubles

– hidden income (tops 6 tr yuan, per findings released by the National Economic Research Institute reveal mainland households are hoarding undeclared income worth 12% of 2011 GDP)
– excess of industrial capacity
– bubbles in municipal and city level debts

Between 2009 and 2012, China’s investment grew by ~3 trillion yuan each year. The biggest share – around a third of all investment – was pumped into new manufacturing capacity. The build-up was unprecedented in global history. Glass-making capacity, for example, grew by 50 per cent. China now has 1,650 shipyards, while the city of Tangshan in Hebei boasts a greater steel-making capacity than the whole of Germany.

In today’s shaky economic conditions of the West, how would the world sustain if China’s economy falls apart? The risk seems unpalatable to me.

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