Goodness, yet another prediction of a China bubble getting ready to burst. Barry Ritholtz pointed us to Edward Chancellor’s top ten list of evidence of a China bubble:

China Bubble?

1. Great investment debacles generally start out with a compelling growth story (The China Dream)
2. Blind faith in the competence of the authorities (The Communist Party of China We Trust)
3. General increase in investment (Chinese investment Boom)
4. Corruption (rampant in China)
5. Easy money (Money supply grew by nearly 30%, interest rates maintained well below nominal growth rates)
6. Fixed currency regimes (Chinese currency, the renminbi, is pegged to the U.S. dollar)
7. Rampant credit growth (new bank lending increased by nearly RMB 10 trillion, a sum equivalent to 29% of GDP)
8. Moral hazard (China’s leading banks, among the world’s largest by market value, are seen as too big to fail)
9. Precarious financial structures (Chinese banks are particularly reluctant to report problematic loans)
10. Strong credit growth and rapidly rising property prices (a widespread belief that the property prices can only go up)

We first noted some of these issues five years ago, and so far China has done just fine. However, there is no getting away from the fact that these warnings are now appearing with disturbing frequency today.

This entry was posted on Sunday, March 28th, 2010 at 11:40 am and is filed under business, China, Democrats, General, Republicans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.