Tuesday, June 13th, 2006
China’s foundations shaky
China has fuelled global growth for years now. Indeed, China has become the new ‘dot com’ and opportunities there are talked up by companies wanting to put a rocket under their stocks. There’s no question that its economic performance has been miraculous. But when everybody is repeating the same mantra — that China will grow indefinitely — it’s best to be cautious. The last Asian crisis was created by massive outflow of international funds from the tiger economies when investors realized their amazing growth was built on a poor structures. The tiger’s banks, for example, were riddled with non-performing loans. As the Daily Telegraph points out, China’s underperforming stock market could signal that the country’s financial system is not in great shape. With global markets reeling, the spotlight could be shone on the strength of China’s underlying economic system.
Word Count: 133. This entry was posted on Tuesday, June 13th, 2006 at 7:42 pm and is filed under Emerging markets. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
