My forecast of China’s economy in 2010

I am no economist, but I can make a few predictions of China’s economic situation in 2010. As a common consumer and wage earner, I see into my wallet and make the following economic forecast:

  1. House prices will NOT fall. The last thing the government wish to see is massive bank insolvency due to slump in real estate prices. It will try everything to save the cash cow while not inflate the market so much to burst the bubble. The house price will remain stable.
  2. The age of inflation has come. The cost of protecting the real estate market is steady rise of inflation rate. More money will be printed to make up for the staggering house prices, and consequently the cost of living will rise together with the price of commodities for livelihood.
  3. Hopefully, the printed money will flow more into the pockets of the grass people who are the engine of the economy. If left with shrinking savings and no reliable social safety network, the damaged engine will cause the economy to collapse.

So the key of all economic problems in China depends on one thing: if the mass population in the bottom of the social pyramid can restart the engine and keep it running.

I will see what happens next year.

7 Replies to “My forecast of China’s economy in 2010”

    1. The Yuan will not necessarily appreciate against the dollar since China is becoming less and less export-dependent.

      The U.S. dollar may even become more expensive if the U.S. economy starts to recover.

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  1. “It will try everything to save the cash cow while not inflate the market so much to burst the bubble. The house price will remain stable.”

    That is going to be tricky.

    There are predictions for each taste. From collapse to business as usual.

    Shouldn’t the govt diversify investment options in China? Too much money looking for profits but with limited investment options, the source of many bubbles.

    It may be the time to allow Chinese individuals finally to invest abroad, maybe through Chinese own investment companies.

  2. The economy is not likely to collapse, but inflation and stagnation are at the corner.

    China knows the importance to diversify its investment, but what areas can it invest except for resources and securities?

    The biggest investment should be domestic, and focus on creating the basic social safety network. We will see what policies the govt is brewing for the next year.

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