For past 20 years, real estate was
the major driver of the Chinese rapid economic growth. In late 1990s, party
finally allowed on urban Chinese to own homes, and economy soared. Chinese People
poured life savings into a real estate. Industries like glass, steel and even home
electronics grew rapidly until the real estate accounted one—fourth of the GDP
in China.
The Debt that was paid for its
economic boom which includes the funds borrowed by the governments, developers
and industries, International Monetary Fund (IMF) noted that over 50 years in
the past, only four countries experienced rapid buildup of debt as China during
past five years. All other four Sweden, Ireland, Brazil and Spain faced banking
crises within three years of supercharged credit growth.
China then followed Japan and SoKor
in using exports in order to pull itself out of poverty. But China’s massive scale
now becomes a restraint. As world’s largest product exporter.
Mr. Xi’s reverse campaign with China’s
economic slowdown or at—least limit. It follows standard recipe of the Chinese
reformers which was to remake financial system so that it encourages risk—taking,
break up the monopolies to create bigger role for the private enterprise, rely
more on the domestic consumption.
But in reality even the leaders
of China trouble enforcing their will.
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