Monday, March 22, 2010

Marc Faber: Chinese Economy Will Slow, Not Crash

Marc Faber on Chinese Economy

Investment expert Marc Faber said the Chinese economy, which a number of economists and analysts have said could crash sometime soon, won't crash, but it will definitely slow down in the second half of 2010.

Some feel even if the Chinese economy does slow down, it'll still grow at a rate of 8 to 9 percent; solid growth by almost any standard.

Some American politicians, along with the increasingly irrelevant Paul Krugman, have been publicly blasting China for its monetary policy, a type of action that has never worked with Asian people, and is not the best way to gain cooperation.

China will eventually change its monetary policy, but these types of populist actions are just plain stupid and bad strategy.

The Chinese would win the battle if they simply decided not to acquire any more U.S. Treasury instruments, and could do more damage if they decided to sell them as well, as the Fed would then have to print hundreds of billions to purchase them, which would drive down the value of the U.S. dollar even more, which would bring a lot of consequences to the country.

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