Posted on 07/29/2013 7:04:58 PM PDT by TexGrill
(Reuters) - After decades of emulating Japan's export-driven economic miracle, China appears in danger of following it into the same kind of economic coma that Japan is trying to wake up from 20 years later.
China is struggling to wean itself off a habit picked up from its more advanced neighbor: relying for growth on exports and credit-fuelled investment. That has left its economy lopsided, economists say, with massive over investment in property and industries rapidly losing their cost advantage, from mining and electronics to cars and textiles. Wages are rising, the return on investments falling.
With growth slipping, China's President Xi Jinping and Premier Li Keqiang seem determined to avoid a U.S.-style financial crisis, complete with widespread bankruptcies and job losses.
Preventing such a crisis though could embalm diseased sectors, stifling efforts to make growth more sustainable and instead create the kind of "zombie" banks and companies that sucked the life out of Japan's economy, economists say.
Add a population graying faster than Japan's did, and economists worry China may be attempting the impossible.
"There is a huge amount of denial. People think that demographics don't matter," said Chetan Ahya, chief Asia economist at Morgan Stanley in Hong Kong. "I'm worried about the deflationary risk."
(Excerpt) Read more at reuters.com ...
What brings an economy out of an economic coma?
Too bad they don’t have an economic genius for a leader - like we do.
/s
Yeah, to bad they don’t have a new can called obamacare to kick down the road for the next 10 years. I can’t wait to make my first purchase using yuan. Screw Obama and bernanke.
“What brings an economy out of an economic coma?”
Population growth via births or immigration. War often works too. Lower taxes and regulations.
I’m afraid the civil war in Syria with us and Russia supporting opposing sides may be that major war. Especially with the Middle East dividing into camps.
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