The importance of exports as a driver of China's growth is overstated. Exports as a percentage of China's 2010 gross domestic product were 27%, down from 35% in 2007. In value-added terms, the real share of exports is even smaller. UBS economist Wang Tao sees a base case in which falling exports shave a percentage point from China's 2012 GDP growth. With GDP growth expected to be around 9% in 2011, all else being equal, that is hardly a disaster.Real-estate investment is a key driver of China's growth, equal to around 14% of GDP in 2010. Ghost towns of empty houses raise fears that construction might be set to slow sharply. But with millions moving from the countryside to the city each year, and rising wages driving demand for higher-quality accommodations for existing city dwellers, fundamental demand is strong. The government also has policy options: Borrowing restrictions for developers can be loosened and speculators allowed back into the market.
Spot on.
There are way too many empty apartments in the cities now. But there are still hundreds of millions of people who are going to want to fill them in the coming years. If prices fall, it will simply speed up migration to the cities.
hello sir ,
ReplyDeleteI am Robin
it is quite interesting but just curious to know whether it is possible for china to hit the level of development it is expecting?
I think it's possible. There are vast reserves of untapped human capital. If that can be used more effectively, it's easy to imagine China with a $20 or $30 trillion dollar economy in our lifetimes.
ReplyDeleteBut of course, the future seldom follows our straight-line predictions.