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:
- 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.
- 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.
- 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.