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    When this bubble bursts

    When this bubble bursts

    They will not have China to bail them out:

    For so long we have heard nothing but how the Chinese were doing things right. Hundred of millions rising up out of poverty. News cars replacing bicycles on the streets of Beijing. An economy that could not be stopped, which grew year after year after year by 10%+. But there is trouble brewing.


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    LukeHandCool | October 27, 2011 at 12:30 pm

    Coupled with the demographic nightmare China is all but certain to face … an inverted population pyramid as the one-child policy has been willfully adopted in the Chinese consciousness … exacerbating a trend which would have taken effect anyway with increasing per-capita income, and the graying of China will allow even less opportunity for working-age Chinese to fill those empty malls and cities. They’ll be busy working to provide for the retirement and health care of the fast-growing, over-65 segment of the population.

    There is a lag between below-replacement fertility levels and total population decline. Japan has been at below-replacement levels since the 1970s and just realized its first year of actual population decline a few years ago (it was about -10,000). The decline is increasing every year, 2010 bringing an estimated decrease of 123,000 in Japan’s population.

    According to the 2010 CIA World Factbook, China’s fertility rate now stands at 1.54 (2.1 being replacement level). Hong Kong, Taiwan, and (majority Chinese) Singapore are all far below even that, showing it to be increasingly likely that as China continues to develop economically, its fertility rate will continue to decline.

    With fewer and fewer working-age people supporting more and more elderly … it’s not going to be a pretty picture. They will envy our ratios.

    LukeHandCool (who loves babies and wants at least one more … even though it’s extremely late in the game … basically the two-minute warning at the end of the fourth quarter).

    Are they trying to avoid a revolution since they cannot reasonably provide instant gratification to even a majority of their population, or is it because they cannot accommodate a low GDP consumer oriented economy, or something else?

    Ipso Facto | October 27, 2011 at 4:36 pm

    Demand curve slopes downward because of inverse relationship between price and quantity. That is, except in China.

    In point of fact, China has never been doing “everything right” or even most things right. In truth, I’d be hard pressed to point to anything they’ve actually done right.

    China is pretty much a “Potemkin Everything” and their international fiscal policy is mostly a shadow play. Their economy is not and never has been as advertised.

    China is faced with a massive contradiction that very few Chinese are able to grasp and none able to deal with. This is not new — they have been unsuccessfully trying to deal with it for well of a hundred years.

    China cannot deal with this contradiction and remain Chinese. I foresee interesting time ahead.

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