After blogging for over a year and touching on the oft-mentioned theme of the Chinese stock market meltdown, I am now confronted with a meltdown of global proportions.
Ironically, the Chinese economy might be in a better position than many to withstand this global crisis. I think at this point, the Chinese economy will no doubt feel the effects of this crisis roiling in the US and Europe. The effects will be indirect - lower demand for Chinese imports and less overseas investments.
The banks in China was not plagued with the same problems with their counterparts in the west ironically because the economy here in China is not as mature. Credit is not used as much as America as a tool to finance investments and purchases. Therefore, the impact on China will be coming externally rather than internal. The key for China and its large eastern cities will be their own credit markets and the real estate market. After the stock market meltdown, China can ill-afford to have a real estate meltdown. The real estate market have shown signs of weakness, and are indeed very much over priced. If this part of the economy starts to deteriorate, things could become quite ugly as well
Of course, it still remains to be seen if things will get as bad here in China as elsewhere in the world. One thing is for sure, Chinese economy is not as leveraged as Americas, and that just might be enough to keep things from getting really ugly.
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1 comment:
At first, Chinese may claim that the world financial crisis has little effect on the economy, however, as a country rely so much on the exports; the whole world recession can affect it inevitably. But the country will survive, not only because of it large foreign reserve, but because of the striving and enterprising Chinese People.
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