Sunday, March 27, 2011

What if China suffers an economic collapse?

A Facebook friend posted a link to an Australian website the other day that carried a story called "China's Ghost cities." It's the kind of story that would make anyone who knows anything about Austrian economics cringe. I know a bit, so I cringed when I saw it, but it wasn't a surprise to me, I knew the story already.
I have written about China before, here and again more recently here. An excellent article in Canadian Business Magazine (issue cover is pictured) by Jason Kirby (who has some Austrian economics credentials) called China's Coming Collapse, outlines what he believes will be the eventual demise of the economic miracle that seems to be happening in China.
This is a perfect example of how central planning in an economy creates massive distortions that eventually need to be rectified. The distortions cannot continue for long, and the scary part is, what will happen to countries like Canada that supply commodities to places like China? When, not if this collapse happens is the only thing I think that is questionable. Have a look at the video link on ghost cities above, its quite stunning.  

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