Chinese Economist Larry Lang, Professor of Finance at the Chinese University of Hong Kong, has argued, quite forcefully and persuasively, that the People's Republic of China is "nearly bankrupt", faces recession, and will become "the poorest nation in the world."
Point of fact, China already is one of the poorest nations in the world. No matter how strong the economic engine of the country appears to be to the outside world, the housing market in inflated, as is the Chinese currency, and Communist Party leaders are ignoring all warnings that an economic tsunami is about to wash away any of the paper gains which the Chinese Regime has been flashing to the world.
Professor Lang makes his case along five points:
1. China is burdened with a national debt of $5 trillion dollars, astronomical not just numerically, but politically considering the greater degree of poverty sweeping the country.
In addition to the horrendous national debt, Professor Lang has compared every Province in China to Greece, a nation whose debt woes are not only pushing the Aegean nation to default, but threatens to take down the rest of the European Union.
The similar domino effect could undo Mainland China.
2. China has floated a 6.2% inflation rate, when the Professor has countered that the actual rate is 16% -- a scheme reminiscent of the sluggish economy that afflicted Great Britain right before Margaret Thatcher came to power.
3. The regulations and diversion of raw materials in China are creating excess capacity. Ongoing housing construction has not succored any buyers, in a nation where private consumption currently contributes only 30% to China's economic prowess. State expenditures without requisite trade among individuals and private firms, plus the ongoing housing bubble poised to pop, would make the Great Recession of 2008 look like one bad day on Wall Street.
4. Instead of a steadily rising GDP of 9%, the Chinese economy is actually contracting by 10%. This is a massive distortion, threatening any long-term growth and stability in the region. It's outrageous to think that all this number fixing his deluded established Economists like New York Times' Thomas Friedman. Even the President has been swept up by the "powerhouse" of China, which is turning out be nothing but a teetering house of cards.
5. Taxes on businesses are so high, one wonders how anyone is able to make a profit, let alone maintain a decent profit margin in China. With tax rates as high as 70% on merchants, followed by 81% for individual earners, the bloated regime is running out of less revenue to run through.
Professor Lang's should serve as a stern warning to any academic or intellectual convinced that China is soon to be the next global powerhouse. The nation cannot discharge its looming debt, yet insists on planting on the mainland population, the vast majority of whom live well below the poverty line, the growing cost of doing government: state-sponsored economic and political oppression.
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