tag:blogger.com,1999:blog-5235419263414453422.post8655048572246188643..comments2024-02-23T01:30:06.101-08:00Comments on Early Warning: Timing of China's SlowdownStuart Stanifordhttp://www.blogger.com/profile/07182839827506265860noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-5235419263414453422.post-69491469107175101252012-05-15T17:06:39.799-07:002012-05-15T17:06:39.799-07:00I agree with Justin.
China pessimists aren't ...I agree with Justin.<br /><br />China pessimists aren't worried about a Greek-style credit crash, they're worried about a Japan-style end to growth.<br /><br />You can only build roads, factories, high speed rail and condos for so long, and then you have too much, and the best you can do is prevent a crash. Keeping growth going pas that point is much harder.<br /><br />Japan is still building highways to nowhere, but they can't manage to get growth going again...Nick Ghttps://www.blogger.com/profile/12721405349726668110noreply@blogger.comtag:blogger.com,1999:blog-5235419263414453422.post-58352085357650145302012-05-08T16:36:20.718-07:002012-05-08T16:36:20.718-07:00I am not sure I agree with this argument Stuart as...I am not sure I agree with this argument Stuart as it confuses stocks and flows. A country can engage in excessive investment that results in the sale of highly competitive exports and a healthy current account surplus. However, in effect, the balance sheet is deteriorating at a faster pace than the income statement is improving. Having seen the end of the Japanese bubble economy while living in Tokyo I can vouch for that. <br /><br />And yes it is true that Japan has not faced a balance of payments crisis (yet), but it has certainly faced a growth crisis. In the process, it has come to provide almost zero effective demand for the global economy. With this as background, I don't think Pettis is arguing that China will collapse into a black hole of external debt overnight, but rather that it will turn into the global locomotive of growth that unfortunately gets derailed.The Rational Pessimisthttps://www.blogger.com/profile/15839671809950298150noreply@blogger.com