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Asia Growth Illusion, Why China May Not Be The Odd One Out?

Economics / Asian Economies Aug 29, 2013 - 12:34 PM GMT

By: DK_Matai

Economics

Which are the world's worst performing currencies over six months losing between 20+% to 8+% against the US dollar? 1. Indian Rupee; 2. Brazilian Real; 3. South African Rand; 4. Indonesian Rupiah; 5. Turkish Lira; and 6. Russian Rouble -- in that order. So whose left amongst the 'Emerging Market' majors including the BRIC nations save China? How long before the Chinese fortune cookie crumbles given a multi-trillion dollar black hole of local government debt which nobody really wants to talk about?


China is the elephant in the room or the emperor without clothes that nobody has really taken a serious look at with a magnifying-glass: total debt in China -- government, corporate and household -- has shot up from 130% of GDP in 2008 to nearly 200% in 2013 or more than $16.3 trillion according to PBoC central bank data [Financial Times]. Such a rapid increase in borrowing has led to crises in diverse emerging countries ranging from Argentina to South Korea, why should China be any different?

What if all the statistics including GDP growth and inflation numbers are cooked in China just like via the 'Gosplan' infamous statistics department before the USSR went belly up? This type of hocus-pocus can only be easily done in a centrally planned economy so it is just as feasible in China now as it was in the USSR back then in 1989! That colossus of a nation with many flags, the USSR, ceased to be within two years of a large scale financial, economic and geo-political crisis which began in 1989. What about China, another nation with many many flags?

The entire Asia growth story could yet turn out to be an illusion -- from China to India -- and perhaps we may yet be laughing at the narrative that China's GDP will overtake USA's by 2015 just as much as we now laugh when we are reminded that back in 1989, every soothsayer thought that Japan's GDP would overtake USA's by 1995. It never happened!

What are your thoughts, observations and views? We are hosting an Expert roundtable on this issue at ATCA 24/7 on Yammer.

By DK Matai

www.mi2g.net

Asymmetric Threats Contingency Alliance (ATCA) & The Philanthropia

We welcome your participation in this Socratic dialogue. Please access by clicking here.

ATCA: The Asymmetric Threats Contingency Alliance is a philanthropic expert initiative founded in 2001 to resolve complex global challenges through collective Socratic dialogue and joint executive action to build a wisdom based global economy. Adhering to the doctrine of non-violence, ATCA addresses asymmetric threats and social opportunities arising from climate chaos and the environment; radical poverty and microfinance; geo-politics and energy; organised crime & extremism; advanced technologies -- bio, info, nano, robo & AI; demographic skews and resource shortages; pandemics; financial systems and systemic risk; as well as transhumanism and ethics. Present membership of ATCA is by invitation only and has over 5,000 distinguished members from over 120 countries: including 1,000 Parliamentarians; 1,500 Chairmen and CEOs of corporations; 1,000 Heads of NGOs; 750 Directors at Academic Centres of Excellence; 500 Inventors and Original thinkers; as well as 250 Editors-in-Chief of major media.

The Philanthropia, founded in 2005, brings together over 1,000 leading individual and private philanthropists, family offices, foundations, private banks, non-governmental organisations and specialist advisors to address complex global challenges such as countering climate chaos, reducing radical poverty and developing global leadership for the younger generation through the appliance of science and technology, leveraging acumen and finance, as well as encouraging collaboration with a strong commitment to ethics. Philanthropia emphasises multi-faith spiritual values: introspection, healthy living and ecology. Philanthropia Targets: Countering climate chaos and carbon neutrality; Eliminating radical poverty -- through micro-credit schemes, empowerment of women and more responsible capitalism; Leadership for the Younger Generation; and Corporate and social responsibility.

© 2013 Copyright DK Matai - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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