China — The problem with the Chinese economy at this point is that it’s too dependent on fixed infrastructure investments, similar to that the US is too dependent on consumers. With so much capacity built in China, there is the danger of too much price competition, significant resource misallocation, and a resulting hard landing.
PS, you said, “The problem is that China cannot create a consumer. Did you read in the story that the shopping malls are empty, as the people are either too poor, or too much savers.” (Thanks for the link, BTW) That’s not entirely true. The very high end malls are empty because the builders went after prestige and their pricing was way too high (we’re talking about Paris NYC type of prices). If you go to shops normal Chinese go to, there is plenty of consumption. Not all chinese are savers, either. Younger generation who’s making good money fast are quite good at consuming. Very savvy multi-nationals are already making a lot of money in China.
PerryChase, even if Chinese consumers are buying US branded products, it may not benefit US jobs because those products are very likely made in China. The only true exports (that I’m aware of) are airplanes, chips, software, highend capital equipment (machinery, likely from Europe, Japan and Korea), etc. China is also resources hungry, so it imports a lot of raw material from places like Australia, Brazil, and Africa. I think that US exports to China algriculture products. Entertainment is another US export.
If you look out 20 years, the probability of US living standard decline relative to the rest of the world (Asia) is very high. (Note the word “relative”). US just isn’t producing enough value-added products.
