So yesterday I went stirring up in another thread, and was rightfully cursed by starter of thread, and told to go start own thread. Fair enough, here we go.

So Kunming streets full of signs saying shops for rent. Most friends in businesses talk about bad times. Some say they worry. Kunming Bank of China office didnt give any USD, and said they were all finnished. And so on. The signs are there, you can see it, you can smell it, its even in the dreams. How serious is the situation, nobody really knows. Jobs are accepted now that nobody gave a damn for just a year ago. Prices have gone up, people loose jobs.

If situation continues, it will have consequences. And this should not come as a surprise. All the signs are there already.

Note that the economy is not shrinking, it's just not growing as fast as it was.
Income distribution is another matter, as it is virtually everyhwere.

Only a fool believe in those numbers. Even mainstream media can say they cant be trusted. Whats the real numbers, maybe nobody knows.

@Peter: I won't swear by the accuracy of published numbers either, but does this mean you have evidence that the economy is actually shrinking?

www.ed2000.com/ShowFile/638347.html - The Great Chinese Crash -

Typical BBC Propaganda for those who choose to believe it.

Evidence? Heh.

Shrinking, growing, exploding, miltiplying or collapsing, whatever, these are just words.

The arrow is pointing down. This all can agree on. The longer it last, and the more it goes down, the more there are chances for consequences.

Personally, I find the speculation of possible consequences far more interesting than speculation on percentages.

What do you mean by 'the arrow is pointing down'? Again, I don't think the economy is shrinking; again, I think there's a distribution problem. Show me otherwise.

Hard to argue with the signs as they fit into the bigger economic picture.

The Chinese economy has done fantastically well for a long time, and huge investments have been made into building all manner of things in China. But this means that there is now a great deal of overcapacity in the system, the owners of the un-needed factories, machinery and apartment blocks are not going to be able to pay back their financial backers. Mostly, the money came from Chinese banks, but also international banks such as HSBC and Standard Chartered. The government can keep pumping money into the system to keep liquidity, but the private banks may cut off the supply of money soon because, if the BBC is to be believed, China's debts are increasing by 2-3 trillion $ a year.

Saw a thing on ChinaWire yesterday which said that American manufacturing is the most efficient in the world in terms of production per worker and costs only $4 on average more than Chinese made products. China is way behind in the efficiency ratings because they typically employ way more people than they need to do the job and don't pay enough attention to efficiency. When salaries were 1000RMB per month for migrant workers, that didn't matter so much. Now, salaries for migrant workers are around the 3000 mark, so China is no longer a super cheap place to manufacture goods. The Chinese economy was until recently totally dependent on exporting manufactured goods. When the heart of an economy takes hit after hit, the rest of the economy will suffer. Globalisation has made China rich, but also made it's main attraction - cheap labour - not so cheap anymore.

But, it's not all doom and gloom. China has a couple of things in it's favour. 1) a strong government with greater control over the economy than most.
2) A hardworking and motivated workforce who are prepared to seize opportunities.

Alien, you are right - the economy as a whole isn't shrinking, that would be a depression. But, manufacturing IS shrinking as companies move to Vietnam and other places cheaper than China. This means that the economic growth rate (as a percentage of the whole) is falling fast.

@Haali: I agree with your comment addressed to me.

I do, however, think it worth considering the real human meanings of standard terms like 'efficiency' and 'cheap labor', which are often used like black boxes in a conversation. Such boxes should be opened.

The tier1 cities are all doing fine. No problems with the economy in Beijing, Shanghai, Shenzhen, and Guangzhou. Rest of the country isn't doing so well.