China’s economy grew barely above the government-decreed minimum of 7.5%. Deep frustrations simmer beneath the surface and can explode at any time. To maintain social stability, the government douses the land with money. Growth at any cost. But the results are majestic property and construction bubbles – and they can’t be inflated forever.
The US has abused its three phenomenal privileges – including the control of the only world currency – to put global financial stability at risk, “like a truck full of dynamite heading right toward us,” said the chairman of the International Advisory Board of the Universal Credit Rating Group. But a “new financial order” is forming. And there’s a timeframe.
Supercar-makers Lamborghini, Ferrari, and Rolls-Royce are reacting to the forces whacking global markets for luxury products: a corruption crackdown in China, Abenomics in Japan, and the Fed’s money-printing in the US. The idea that sales in China, which is printing billionaires by the dozens, are crashing is a hard-to-swallow concept for the industry.
With wages increasing and strikes engulfing the country, the cheap labor force that fueled China’s economic boom by underselling competitors is coming to an end. The game is to move factories into the interior. But costs of land, water, energy, and shipping are also rising. So, offshoring to cheaper countries. But….
“Seize the ground of new media,” Chinese President Xi Jinping said elegantly when he told state-owned media to get on the ball. So, effective today, the next chapter in seizing the ground of “new media” is this: people found by the Chinese judicial machinery to have posted libelous language online can expect three years in the hoosegow. Conditions apply.
In Paris, “Chinese” has a new meaning: money. This phenomenon shows up by the busload at luxury retailers where sales staff say a few words of bad Mandarin, instead of bad English, in hawking overpriced handbags and glittery baubles. Now Aéroports de Paris has put a number on it. A glimmer of hope for France, though perhaps of the wrong kind.
Experts at the German Federal Office for Security in Information Technology (BSI) determined that Windows 8, the touch-screen enabled, super-duper, but sales-challenged operating system is dangerous for data security. It allows Microsoft to control the computer remotely through a backdoor – with keys likely accessible to the NSA.
China is the promised land for our revenue-challenged tech heroes: 1.2 billion consumers, economic growth several times that of the US, and companies splurging on IT. Layer the “cloud” on top, and China is corporate nirvana: a high-growth sector in a high-growth country. Or was nirvana, now that the NSA’s hyperactive spying practices have spilled out.
China’s phenomenal construction bubble, driven by local governments that must keep their economies growing, no matter what the costs, and funded by state-owned megabanks, has led to an equally phenomenal misallocation of capital, overbuilding, waste, ghost cities, empty shopping malls, and now an epidemic of shuttered luxury department stores.
China’s property and infrastructure bubbles, nurtured by limitless borrowed money, are still swelling up beautifully. Service industries are also growing. But hot air has been hissing out of manufacturing. Now Zhang Ruimin, CEO of China’s largest appliance maker Haier Group, put his finger on the problem. And it doesn’t look good for manufacturing in China.