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Thread: Can property tax ease the high housing prices?

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[quote=BOBERT,419194]He also notes that China’s level of investments in recent years – with fixed investments accounting for nearly 50 per cent of GDP – is unprecedented. But, he adds, the problem is that “when you create too much capacity, the return on invested capital will ultimately prove disappointing. But China is not a capitalist economy where one needs to worry about petty things like that (or so they seem to think). It is driven as much by its desire to dominate on a global scale, as it is by basic economic considerations.”

Ultimately, however, the Chinese economy will succumb to economic forces, and the pain will reverberate widely outside the country. Commodity producers, such as Australia, will be hit hard.

According to Jensen, “when the Chinese ultimately bite the bullet and force the economy to slow down meaningfully (and I believe it is a question of when, not if), the biggest victim is likely to be commodity prices, and none more so than base metal prices, which in recent years have been highly correlated to the fortunes of China.

“Remember – when an economy, which has grown accustomed to expanding by 10 per cent per year for more than a decade, suddenly experiences ‘only’ 5 per cent growth, it will feel like a recession, and its people will react accordingly.”

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