Month: April 2012

China’s Economic Dark Side Part II

ICangles Investment Post…

China’s economic successes are well known. Less so is the case around the immense challenges the country faces in remaining on a path of progress. These challenges go beyond an over-reliance on exports, the high likelihood of an export led development model faltering during the transition from an export-focused to more consumer-focused economy, a sizable real estate market bubble and significant levels of low credit quality debt in the financial system, as mentioned in my previous post on China’s Economic Dark Side. In addition the money created in relation to China’s holdings of foreign debt represents a substantial liability and inflation risk, as articulated in my earlier post “Big Risks on Central Bank Balance Sheets”. What is more, China’s economic challenges extend to societal issues to such an extent that the country’s history of periodic periods of revolutionary implosions may very well repeat.

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