Monday, April 4, 2016

End of globalization economic cycle hurting China now

Globalization is the greatest economic factor of  the last 30 years. And what that meant is you were transferring mainly manufacturing from Europe and North America to China and other developing countries. That gave a tremendous burst in trade. But that globalization is over. You've reduced manufacturing pretty much to an irreducible minimum and that process is over. That was what was really pushing China. Plus they were exported back to Europe and North America. It didn't really change much overall, just where it was being done and you a lot more ships all over.

Another thing driving China was infrastructure spending, because their trade exports has been slipping. Because you got to have customers and where are the customers ? North America and Europe. So they covered it up with infrastructure spending. But what did they get ? Huge debt and ghost cities.

Chinese consumers account for about 37 percent of GDP. in the US its about 70 percent of GDP. They got a long way to go. you look at charts of G7 and the BRIC countries and nobody has a lower ratio of consumer spending to GDP than China.

It doesn't mean they wont get there but we are talking about decades, you are not talking about anytime soon.