{"id":127337,"date":"2011-11-25T11:45:57","date_gmt":"2011-11-25T18:45:57","guid":{"rendered":"http:\/\/chinadigitaltimes.net\/?p=127337"},"modified":"2011-11-25T11:45:57","modified_gmt":"2011-11-25T18:45:57","slug":"is-winter-coming-for-chinas-economy","status":"publish","type":"post","link":"https:\/\/chinadigitaltimes.net\/2011\/11\/is-winter-coming-for-chinas-economy\/","title":{"rendered":"Is Winter Coming for China's Economy?"},"content":{"rendered":"

Amid tumbling real estate prices<\/a>, credit woes in Wenzhou<\/a>, and data released yesterday showing that China’s factory sector shrank the most in 32 months in November<\/a>, Tsinghua University business professor Patrick Chovanec details comments he made on a “bulls vs. bears” panel at last week’s The Economist China Summit in Beijing<\/a>:<\/strong><\/p>\n

The main theme of my comments were \u201cWinter is Coming.\u201d\u00a0 The phrase, as I explained, is a reference to the popular HBO TV series\u00a0Game of Thrones\u00a0<\/em>(and the novels by George R.R. Martin), which depicts a medieval fantasy world in which summers and winters last for many, many years,\u00a0alternating not over the course of a single year, but a lifetime.\u00a0 After so many years of summer, many people begin to doubt whether winter will ever return, or remember what\u00a0it is like.\u00a0 One family, whose task is to guard the North, have a watchword:\u00a0 \u201cWinter is Coming.\u201d\u00a0 It serves as a warning, and a reminder, to be prepared for difficult times ahead \u2014 and in China\u2019s case, that the current drivers of growth are unsustainable and a correction is coming (and, by the looks of it, is already underway).\u00a0 I\u00a0had already planned to introduce\u00a0this theme when, a few days before the panel, I happened to\u00a0come across\u00a0this\u00a0New York Times<\/em>\u00a0article\u00a0<\/a>on China\u2019s real estate downturn, which concludes with a quote that capture this idea exactly:<\/p>\n

But the real estate downturn has only just begun, Mr. Zhang said, adding, \u201cWe are on the cusp of winter, and we don\u2019t know who will survive it and who will not.\u201d<\/p><\/blockquote>\n<\/blockquote>\n

See also a summary of last week’s panel in Beijing<\/a>, courtesy of Dezan Shira & Associates.<\/p>\n

As bearish signals continue to surface<\/a>, as evidenced by the outlook of billionaire short-seller Jim Chanos<\/a>, one of the biggest investment funds in the world is not sold on a hard landing for the Chinese economy<\/a><\/strong>. From Forbes:<\/p>\n

\u201cWhile there are undoubtedly some significant risks to growth brewing in China\u2019s economy, such as with: local government funding vehicle debt levels, a credit growth slowdown, the possibility of a property price bubble, and the negative impacts on exports from developed world troubles, but a hard economic landing \u2014 or severe financial crisis\u2013 in China is not our base case,\u201d BlackRock Investment Institute said in a report last month. The Institute provides intelligent reports for BlackRock fund managers and high net worth clients.<\/p>\n

China\u2019s strong fiscal situation and implicit government support for the banking system, provide ample cover from a hard landing.<\/p>\n

BlackRock economists said there was a very low likelihood of economic hard landing in at least the next 6 to 12 months.\u00a0 \u201cWe believe that inflation \u2014 while perhaps understated by official statistics \u2014 has likely peaked in China, and should trend down to more\u00a0manageable levels.\u201d Inflation fell below 6% this month, its lowest level on the year.\u00a0 Inflation in China is the lowest of all the big emerging markets.<\/p><\/blockquote>\n

Investor Jim Rogers shares BlackRock’s optimism, telling CNBC<\/a> that China is slowing down because it wants to slow down and that its debt problems do not compare with the United States<\/a><\/strong>. From the interview (via Business Insider):<\/p>\n

“China is the largest creditor nation in the world. America is the largest debtor nation in the history of the world. I’d rather be with the creditors than with the debtors any day.”<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

Amid tumbling real estate prices, credit woes in Wenzhou, and data released yesterday showing that China’s factory sector shrank the most in 32 months in November, Tsinghua University business professor Patrick Chovanec details comments he made on a “bulls vs. bears” panel at last week’s The Economist China Summit in Beijing: The main theme of […]<\/p>\n","protected":false},"author":983,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":"","_links_to":"","_links_to_target":""},"categories":[116,2],"tags":[7337,7800,14775,626,3050,6379,471],"class_list":["post-127337","post","type-post","status-publish","format-standard","hentry","category-world","category-economy","tag-credit-crisis","tag-economic-slowdown","tag-hard-landing","tag-manufacturing","tag-real-estate-bubble","tag-united-states","tag-wenzhou","et-doesnt-have-format-content","et_post_format-et-post-format-standard"],"yoast_head":"\nIs Winter Coming for China's Economy?<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"http:\/\/chinadigitaltimes.net\/2011\/11\/is-winter-coming-for-chinas-economy\/\" 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