China: ‘C’ Stands for Corruption
A recent joke about China’s national animal has been circulating throughout the country.
What is the national animal?
The panda. No.
The dragon. No.
It’s the crane–the building crane that hovers over every city in China.
With that building crane has come widespread corruption–a topic most people want to talk about.
“How can I possibly afford that place?” one young man asked, pointing to a highrise. “I would have to work every hour of every day for the next 20 years. By, that time, the price will have gone up two times.”
As the economy staggered in recent months, some of the cranes became idle as reports of widespread corruption surfaced even in the government-controlled media.
Moreover, the Chinese economy has been overvalued and hit a huge wall this month–a wall some experts think may stay in place.
As Bloomberg noted: “China’s sell off is also a sign that the magic wand Beijing has lorded over its economy in recent years is losing its power. And when investors wake up from the government’s spell, they’re unlikely to be very happy.”
The government has encouraged many Chinese to invest in the market. Without adequate information about investing, the bulk of the Chinese considers the market simply a way of gambling.
The National Interest worries about the potential impact on the entire region. “With the communist giant currently the world’s second-largest economy and major trading partner to most of the countries in the region, the fallout from China’s downturn could be extremely damaging, hitting sectors from commodities to property, curbing investment flows and likely dragging down the rest of the region with it.”
That prognosis may be a bit too early, but I saw many shopkeepers worried about making ends meet during my recent trip to China. Even in Guangdong, the wealthiest province in China, business owners seemed particularly desperate in their techniques to draw customers inside, including promises of frigid air conditioning during a particularly hot day.
But many people think that corruption, including the seizure of longtime individual homes for massive building projects, may be the worst part of the economic miracle in the Middle Kingdon.
For more information on the impact on small investors in China, see http://nyti.ms/1LF1N5E
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