Too big to fail
...kidding.
No, they aren't going anywhere. Truthfully, if China did fail it would be seismic event which would make the Lehman brothers collapse look like a slow day on the market. It really would be time to buy bottled water and tins of beans!
China's GDP numbers are fake, housing market does not move, many smaller steel plants closed doors (more than 50%, that is why Australia dollar is down), smaller export companies are either closed or moved to other south Asian countries, export lost 10% last quarter, because RMB is pegged to dollar, China export to Japan and Europe had a big drop due to stronger dollar against Y and Euro. The reserve is 3.6-3.8 trillion, a big part can not be touched by Chinese government, the big reserve was formed after 2006, just in a few years, it can leave quickly. A lot of it is speculation money from foreign institutions, when this $ went to China, Chinese government printed trillions (about 12.5% each year, and 25% in 2008, 2009) of RMB. Right now, the fake GDP is at 6.8%, the RMB printing is 12.5%, China is kinda like Argentina. There are so many bad accounts inside each banks booking, no one knows how bad the situation is, a lot worse than Japan when bubble was burst in 90s and banking CEOs are jumping off the building.
China is between a rock and a hard place now. If it lowers the RMB rate, the speculation $ will be gone, it will be like Argentina 2002. If it continues to peg to dollars, the export will be dead. The export already had a blow in 2008, when many peasants workers were absorbed to the construction site of real estate bubble, now real estate pretty much stopped, they can not afford to let export manufacture die.
Every middle class Chinese family come to US and buy a house and says it's cheap. Something is wrong in this picture. Good time could be over.
The (gov) economists kept coming out this year, talking about de-link from dollar, looks like it will devalue RMB pretty soon, and RMB has been weak since the end of last year.
*** Why all the speculation $ went to China since 2006? since 2008, the interest rate is almost zero in US, and in China 5-6%, also RMB goes up against dollars by 6-7% yearly, if you bought real estate in China, the real estate appreciates by 15% yearly in Beijing and Shanghai, so by putting your dollars in China since 2006, your return is almost 20% in real estate(big US invest firm bought shopping center, hotels in big cities in China, they sold it all now), or 12% just let it sit in Chinese bank in RMB, this is a once a thousand years opportunity for China, so many people got rich over night , so did Chinese government. But this game can not sustain and finally starts to reverse, just like the Mexico crisis and 1998 Asian Crisis. 2015 will be a turning point for China. Many hedge fund is finding a way to short China, either by RMB or other way. The richest Chinese guy Li Ka-shing(based in Hong Kong) sold all his positions in china last year, including big office building that leased to Boeing and Nokia in downtown Beijing. He bought utilities companies in UK,this guy is the Chinese Warren Buffett, probably smarter than Buffett because he has to fight too much BS in Asia, his leaving was a signal in Chinese real estate market.
Some says Chinese economy is a donkey turd, shinning outside, turd inside. (while the Argentina economy is a bad turd inside and outside)
