Tuesday, April 1, 2014

Slowing Chinese GDP Growth Worries Investors

Jim Rickards, an American economist and investor, believes China will never return to the 9.9 per cent growth rate it has had over the past 30 years.

“When you’re starting from a very low base, you can grow very rapidly with very little input,” he said in an interview with CBC’s The Lang & O’ Leary Exchange.

The economic miracle was powered by rural peasants migrating to the cities, forming households and producing cheap consumer goods for the West. But now fewer people are moving into cities, many Chinese are already approaching the middle-class and there are cheaper countries to manufacture goods.

“Beyond that China has mismanaged its economy. It has a lot of structural problems that could cause much more rapid collapse in the growth,” said Rickards, author of the soon-to-be released book The Death of Money.

He points to China’s “ghost cities” in which apartment buildings, hotels and shopping malls go up on vacant land, with no one to live there.

- Source, CBC: