• Real estate values declined 27 Percent last month.
• Inflation is increasing.

Their economic growth has slowed a bit, but it is still really high at 9.7, at least by the official numbers.  Still, China’s leaders have a problem.  Inflation can eventually create disastrous problems, but eliminating it would require raising the Renminbi, which would slow exports and economic growth.

The real estate problem is just a miss-allocation of assets, and has to work itself out, just as it is doing here.  Not much they can do about that.

China needs to maintain rapid economic growth to manage the migration from rural to urban areas that accompanies its becoming a modern economy.  Slow growth would lead to increased unemployment and political instability, and they don’t handle political instability well in China.

The post China Has a Problem appeared first on Center for Economic Research and Forecasting.

China has a population of 1.34 billion, almost 20 percent of the World’s population.  The United States population is 0.31 billion, less than five percent of the World’s population.  For the mathematically challenged, China’s population is 4.3 times the United States population.  Why should they have a smaller economy?  Ideally, they would have an economy about 4.3 times the size of the United States economy.

The United States economy was about 14.12 trillion in 2009.  Per-capita gross product was almost $46 thousand.  If China’s economy was the same size, its per-capita gross product would be less than $11 thousand United States dollars.  I don’t see any reason to be anxious about this.  In fact, I’d say it is good news when 20 percent of the World’s population increases their standard of living.

The post China Must Have a Larger Economy than the United States appeared first on Center for Economic Research and Forecasting.