Comments on: China cutting overcapacity http://www.creditwritedowns.com/2009/08/china-cutting-overcapacity.html Finance, Economics and Markets Fri, 10 Feb 2012 00:37:00 +0000 hourly 1 By: Edward Harrison http://www.creditwritedowns.com/2009/08/china-cutting-overcapacity.html#comment-56950 Edward Harrison Sat, 29 Aug 2009 13:12:00 +0000 http://www.creditwritedowns.com/2009/08/china-cutting-overcapacity.html#comment-56950 Kbob, while the Chinese economy depends heavily on exports, much as the German or Japanese, there is still a sizable domestic economy not dependent on the West. Arguably the problem in China is one of a misallocation of resources whereby the Chinese have overinvested in the export sector creating significant overcapacity. So I don't see this as a question of where they get the money to consume but rather how can the Chinese reallocate investment without suffering a serious downturn that engenders social unrest. Kbob, while the Chinese economy depends heavily on exports, much as the
German or Japanese, there is still a sizable domestic economy not dependent
on the West. Arguably the problem in China is one of a misallocation of
resources whereby the Chinese have overinvested in the export sector
creating significant overcapacity.

So I don’t see this as a question of where they get the money to consume but
rather how can the Chinese reallocate investment without suffering a serious
downturn that engenders social unrest.

]]> By: Anonymous http://www.creditwritedowns.com/2009/08/china-cutting-overcapacity.html#comment-56946 Anonymous Fri, 28 Aug 2009 16:51:00 +0000 http://www.creditwritedowns.com/2009/08/china-cutting-overcapacity.html#comment-56946 Ed, how do you envision this 'decoupling' playing out? How would China grow without consumption demand from the Western hemisphere? Some people say the domestic Chinese market of 1 billion people will support consumption, but where would there purchasing power come from? I guess the question is about which is the cart and which is the horse. The Chinese need money to consume. They get this money through exporting goods to the west. With revenue from the West dwindling, where would the Chinese get the money to purchase their own goods domestically? I've been struggling with this question for many months now. Ed, how do you envision this ‘decoupling’ playing out? How would China grow without consumption demand from the Western hemisphere? Some people say the domestic Chinese market of 1 billion people will support consumption, but where would there purchasing power come from? I guess the question is about which is the cart and which is the horse. The Chinese need money to consume. They get this money through exporting goods to the west. With revenue from the West dwindling, where would the Chinese get the money to purchase their own goods domestically? I’ve been struggling with this question for many months now.

]]> By: aitrader http://www.creditwritedowns.com/2009/08/china-cutting-overcapacity.html#comment-56930 aitrader Thu, 27 Aug 2009 13:38:00 +0000 http://www.creditwritedowns.com/2009/08/china-cutting-overcapacity.html#comment-56930 So lemme see. Just what was that inverse relationship to productivity and unemployment I remember from my butter or guns days at university...? So lemme see. Just what was that inverse relationship to productivity and unemployment I remember from my butter or guns days at university…?

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