The world's fastest growing economy, China's real GDP is increaing at a breakneck speed.
China's exports this year are expected to soar by 20.8% while imports rise by 18.4%.
Two features of China's economic story compel immediate attention.
The real GDP growth rate reached 11.3% in the second quarter this year, the fastest pace in a decade.
This rate has been driven by heavy spending on new factories and other fixed assets.(Investment)
Earlier last week the World Bank forecast that it expected China's economy to grow this year by 10.4%.
Investment in some industries such as car manufacture exploded by 44.5% in the first six months of this year.
While it seems to be great having such fantastic figures. However, there are also dangers or risks of having such high growth rates.
The dangers/risks will be:
1) High inflation
2) High bad debts
3) Too much short-term spending without sound fundamentals
4) High gearing ratio (too much debts to finance investment)
http://business.scotsman.com/index.cfm?id=1222302006
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