Chinese economy is facing an extremely dangerous situation

2nd Nov. 2008
Caoan Jushi, the son of a high-ranking cadre -- and currently the vice chairman of a US-based investment banking group, often gives analysis and posts articles on the web. His articles are reportedly held in high regard by party heavyweights.
5 or 6 years ago, Caoan made a prediction that the Chinese economy will face collapse after the 2008 Olympics.
Recently, Caoan, in a speech at an economic Forum in Flushing, New York, indicated that despite the boasting by the Chinese communist regime, the economy of China is in an extremely dangerous situation.
Looking at the statistics of two major area, the share market and the housing price, China has the highest percentage decline. That means the impact of this financial crisis on China is huge. The sharemarket in American dropped less than 40%, but it dropped  nearly 80% in China.
Even in Hong Kong, it declined by up to 75%. The housing market in China declined over 40%, compared to 17% in America.
Caoan says that America and China face different types of economic crisis. Americans face the financial and banking crisis, that spreads to the surface of financial transactions, a fictitious financial bubble, a bubble crisis. Its impact on the real economy is not so big. But certainly, this impact may slowly expand.
But in China, it does not have a big impact on finance, but impacts heavly on the solid economic growth. Why do China, and many Asian countries that depend on exports to earn foreign currency, store most their money in American dollars which relies on derived exchange to keep it’s value with due terms.
The damage to China’s economy is that almost 10 years of exporting profits have disappeared. The Chinese government admits that there has been about one thousand billion Yuan lost, but let’s just check on the rise in the value of US dollars to Chinese Yuan, a 20% increase in just one year, that has cost China already 2 thousand billion Yuan. That is to say, China has lost 3 thousand billion Yuan, and 10 years of profit through exports!
The hight tide of factory closures in China has started and will last through the first half of 2009.More than half of the toy factories in Dongguan have closed. and also the shoe making industry has been hard hit, etc.
You have already seen the enormous increase in unemployment, and it will spread into every corner of China, and to the whole world gradually.
The Chinese government has announced reduced tax, this is only just the start of the crisis.