Sunday, June 30, 2013

Why China's Economy May Be Heading for a Crash

...Gordon Chang, author of "The Coming Collapse of China," said China may only be growing 2 or 3 percent and if you strip out all the construction going into ghost cities and "high-speed rail lines to nowhere," the economy may not be growing at all.

He looks at electricity usage as a better indicator of growth than the official Chinese statistics.

"China claimed 7.7 percent growth for the first quarter," he told CNBC this month. "But when you look at electricity, by far the most reliable economic indicator of Chinese economic activity, that grew 2.9 percent in Q1. When you consider that the growth of GDP is historically 85 percent of the growth of electricity, you're talking 2.5 percent (growth)."