Thursday, 3 November 2011

Chinese Bears Getting Bigger

In June I wrote Chinese Bears.

All the waffle on the Chinese economy being based on exports and manufacturing is just smoke and mirrors.
China is a "housing-led economy", says UBS economist Jonathan Anderson, who estimates that property construction alone accounted for 13 per cent of gross domestic product in 2010, twice the share of the 1990s.

While China's anticipated growth is still well above that of other large economies, any reduction could have deep consequences.

The global economy is now even more dependent on China for demand for anything from commodities to luxury goods, given the tepid recovery in the US and Europe's continuing sovereign-debt problems.

If the Chinese housing market slows faster than people had expected, the impact would be felt in a number of markets that export heavily to China.

Many Latin American and African economies have shifted their focus toward Chinese demand for their raw materials, and many Western firms, including US retailers and fast-food chains, now bank on Chinese consumers feeling wealthier to make up for stagnating sales elsewhere.

This was sent to me the other day (h/t Paddy).
Shanghai Homeowners Smash Showroom in Protest of Falling Prices; Developer Warns on Price Drops; "Twilight Zone" of Phony Accounting and Shadow Money

 The property bubble in China has finally burst. Denial has turned to anger as Shanghai Homeowners Smash Showroom in Protest Over Falling Prices

22% Drop Overnight

The drop from 18,000 to 14,000 yuan is a 22% overnight drop and that is just a down payment on the carnage that is coming.

Read the juicy bits in the link.

Then read Chinese, Japanese, Money Please, the parallels are uncanny.

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