All Posts Tagged With: "Chinese Economy"

The BRICs – Brazil, Russia, India and China – are supposed to be the upcoming economic boomers of our age. In fact, the BRICs theory was our first exposure to the world of economics. But now part of the story is looking a little shaky.

We’ve battled this argument before, so we apologise if we repeat ourselves. But it needs to be said because the mainstream media continues to talk gibberish about China’s economy. This is the argument: a falling inflation rate in China allows the authorities to ease monetary policy to avert a hard landing.

From The Economist:

The country that invented the compass, gunpowder and printing is also challenging America in the innovation stakes. We estimate that in 2011 more patents were granted to residents in China than in America.

As you’ll see, the Chinese picture is a lot more complex from up close than it is from far away. We talked about the economy, private equity, where Chinese stocks are listed, and the contrast between industries that are state-backed and those that are not…

About a decade ago, the Chinese government chose a policy of growth at any cost. China’s leaders considered strong GDP growth essential for political survival and national stability.

The main conclusion was that Australia would see rising export earnings on higher volumes but moderating commodity prices. In other words, the China boom will drive export volumes for the next five years. But you won’t see any more mammoth increases in commodity prices.

But there are plenty of sceptics on the China story already. Our old friend Marc Faber told Bloomberg that, “It does not make sense for China to build more empty buildings and add to capacities in industries…

“A surprising jump in first-time claims for unemployment aid sent a painful reminder Thursday that jobs remain scarce six months into the economic recovery.