Thursday, 17 February 2011

Investors warn about financial crisis in China

Warnings about a looming financial crisis in China are becoming louder day by day. According to a new Bloomberg poll almost half of the international investors interviewed expect an end to the current Chinese growth miracle quite soon. Another 40% believe that the crisis will hit China after 2016:

GLOBAL investors are bracing for the end of China's relentless economic growth, with 45 per cent saying they expect a financial crisis there within five years.
An additional 40 per cent anticipate a crisis after 2016, according to a quarterly poll of 1000 Bloomberg customers who are investors, traders or analysts. Only 7 per cent are confident China will escape turmoil indefinitely.
''There is no doubt that China is in the midst of a speculative credit-driven bubble that cannot be sustained,'' said Stanislav Panis, a currency strategist at TRIM Broker in Bratislava, Slovakia, and a participant in the Bloomberg Global Poll, which was conducted last week. Mr Panis likened the expected fallout to the aftermath of the US subprime mortgage meltdown.
Any Chinese financial emergency would reverberate around the world. The total value of the country's exports and imports last year was $US3 trillion, with about 13 per cent of that trade between China and the US. As of November, China also held $US896 billion in US Treasury notes.
Fifty-three per cent of poll respondents said they believed China was a bubble, while 42 per cent disagreed. China's neighbours were the most concerned: 60 per cent of Asia-based respondents identified a bubble in the world's second-largest economy.

Read the entire article here.

It is obvious that a future financial crisis in China will cause particular problems for the German economy, which has grown very well recently, much due to strong exports to China.

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