Thursday, February 25, 2010

Marc Faber: Will China Collapse?

Marc Faber on China

We've been talking about a lot of negative factors which could have a dramatic effect on the market and commodities lately, and all of them are important to keep in mind. That's the case with Marc Faber and his input on China.

Faber sees China as being at a tremendous risk of crashing, to the tune of about a 30 percent chance. He adds that whether it crashes or not it will definitely slow down.

With that in mind, it will have a significant impact on certain commodities, as the Chinese government, to a certain degree, is starting to tighten up some on its lending.

I'm not convinced on the motives of the Chinese yet though, as I think some of tightening is a move in relationship to negotiating on some of its commodity imports, specifically iron ore.

Even so, they do want to cool the economy down some, and that is probably a surety going forward.

The problem is where are they going to cut back on? It doesn't seem it will be in the area of iron ore or steel, as there is huge demand still in China for those, not only domestically but for exports too.

We do have to remember that China, even if it cuts back from its approximate 10 percent growth, down to 8 or 9 percent growth, it's still the biggest growth market on earth, and will drive the commodity market for years to come.

I think a small slowdown in China is more likely than an outright crash, as the elements involved in their are much different than their Western counterparts.

Marc Faber on China

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