Saturday, 24 November 2007

The Alarm Bells Begin to Ring in China

Who will buy all this stuff? Who will buy the plastic garden furniture, the fridges, the toys, the wall of household junk that is thundering out of shiny new factories in China?

Between January and October, China’s statistical bureau recorded $1.2 trillion (£580 billion) of industrial spending. During the same period, lenders in America were slamming the door on their customers, cancelling credit cards, demanding the keys to homes, apartments and trailers. The message from the banks is clear: the party is over. Still, China’s factory floorspace continues to grow. You have to ask the question: who will buy the stuff?

As the US slows (severely), so other other economies will suffer -especially China.

Redevelopment in China will continue to keep things moving, but a great deal of China's economic growth is fuelled by its exports and there will be repercussions. It will be interesting to see how the Chinese authorities deal with the downturn.

Also, with less global demand for resources we should see the commodities boom ease somewhat.

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