Friday, January 22, 2010

The Debts of the Lenders: Why China Cut Bank Lending

Very informative. Please watch the whole video. A city built for 1 million people. And virtually unoccupied.

This is the most (in)famous project. But multiply similar projects like these all throughout the country and you will begin to get an understanding of the scale of the problem. Macro-economic slack has resulted in the government force-feeding the low wage light manufacturing and infrastructure sectors.

This is great news for exporters but poor news for consumers - few of which can afford the shiny new things in their midst. Until China focuses on building its consumer class and relying on low wage serf labor, there is no way that the country can pick up the global slack from the West.
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