Thursday, February 24, 2005

Stratfor on China.

From interviews on CNBC and Barrons:

Stratfor analyst George Friedman suggesting China might be in for a significant slowdown, and possibly a third Asian meltdown. (Japan 1990, East Asia 1996, China 2005-6?)

China has $600 billion in non-performing loans according to S&P, Stratfor thinks it might actually be closer to $1 trillion. They have $650 billion in reserves, Stratfor thinks that's slightly exaggerated, so their bad debts may significantly outweigh their reserves. In addition, there are parallels to Japan in the the real estate / building booms, likely overcapacity in it's industry, misallocated loans, and aging populance. In addition, in China there's seething discontent in rural areas. A number of Chinese companies have recently been shopping for investments overseas, a possible hint of capital flight to safer havens.

Note: A China bubble is something Peter Thiel also suggested. And Jim Rogers said look for a crash in China before investing.


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