I just finished a class here and I was chatting with a professor here about the history of the economy of japan, and how the 80s price bubble in japan essentially exploding in the 90s, and resulting in 20 years of recession which japan is now beginning to rise out of......
But this professor told me that china is in a very similar situation for the following reasons:
1) the yuan is excessively manipulated to the point where it can't rescue any bank in china if banks begin to fail and the price gets forced to the ground:
2) there is excessive speculation in the Chinese market, especially with real estate.
3) American firms are beginning to clamp down on Chinese practices, resulting in some firms looking elsewhere (especially to japan or Korea) for their business
4) china and North Korea relationship, and if the outbreak of war on the Korean Peninsula occurs, a mass exodus of Koreans into china
5) over saturation (expressed above with over speculation) which will result in an inevitable market dry up...
Basically it goes down to this: Chinese firms need to figure out how to avoid a massive explosion of their own economy. The bubble apparently can burst any day now, and would result in a massive world recession......unlessssssss, American firms and other firms focus on different markets.....as mentioned above American firms are already apparently beginning g to do this, resulting in this theory of the Chinese economy collapsing. Changes in the Japanese economic situation and an increased focus on a bilateral relationship with the states is allowing American companies to expand in japan, and apparently a few are jumping ship out of china for japan.
Cambodia as well is beginning to attract international business from china, and very soon, Myanmar will also boast extensive foreign investment.
China needs to change.....everything. Government, business practices, international relations....all of it. But I doubt this is going to happen, even with a new premier in power.
Follow me on twitter: www.twitter.com/phx787