Has China’s Inevitable Economic Collapse Begun?

I know, I know, here in New Zealand you have been promised that China will pick up the slack when the US and Europe go but if you search my blog for China you will find that over the years I have been trying to point out that this is mathematically impossible.

Currently we are, it seems, looking at the deleveraging of the mother of all housing bubbles. Something that has finally got through to the Mainstream media such as Bloomberg:

China’s money-market cash squeeze is likely to reduce credit growth this year by 750 billion yuan ($122 billion), an amount equivalent to the size of Vietnam’s economy, according to a Bloomberg News survey.

The number is the median estimate of 15 analysts, whose projections last week ranged from cuts of 20 billion yuan to 3 trillion yuan. The majority of respondents also said they approve of the government’s handling of the credit crunch and said the episode reinforces their expectations for policy reforms such as loosening controls on interest rates.

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