Thursday, December 9, 2010

China: Taming the Dragon

China is an interesting spot. It has had very robust economic growth in past few years. However, there are arising problems in the seemingly strong country. This will hinder their ability to surpass the United States economically and potential supplant the U.S. as the primary superpower of the world. Among the problems, the largest is the housing boom in China

Similarly to the United States, there was a housing boom. However,there will be a bust. That has yet to come in China. But we have already seen the effects of a widespread housing bust in the United States. Forbes and Time Magazine other are envisioning a future Chinese housing bust. This could bode horribly for the Chinese economy. Others have stated that the inflation in China will become a major problem, squeezing the poor. On the issue of competitiveness, the Chinese worker is seeking for a salary increase. This has the potential to hinder Chinese growth. Factory workers in places such as Vietnam and Bangladesh are paid less on average than their Chinese counterparts. Companies such as H&M, a clothing retailer are in the process of moving operations. The ubiquitous Made in China label may not be so ubiquitous in the coming years. This means that the Chinese must grow other fields of their economy. This should not necessarily be a major problem but could present an obstacle for the Chinese.

In the meantime, the Chinese must tame the dragon before it is too late. They many advantages including a surplus of revenue, they own large amounts of assets, and China is a rising intellectual power. These are things that other governments would be yearning for. However, there are issues in China that must be addressed for success of their nation. 

    -S. Martin 

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