We put the knock on China the other day – not for the first time -- in a commentary concerning Google’s security problems there. This elicited a fascinating response from reader Mario Cavolo, a frequent contributor to the Rick’s Picks forum who lives and works in Shanghai as a motivational speaker. We asked him to expand his remarks, which cast China in a very bullish light. Here’s what Mario had to say: Stop listening to the bubble doomsayers and pay attention to the realities of why China’s expansion will continue for many years. My observations as a fly on the wall are a collective reflection of what I and other foreign businesspeople living here for five to ten years have experienced. The Mother of All Expansions ** China's expansion right now is the same as the U.S. postwar expansion. It should be easy to recognize the parallels: inflation of consumer prices, real estate, the cost of doing business, continued asset inflation with rising stock markets are all hallmarks of a country's economic and societal emergence. ** China's expansion is fired by huge supplies of a fuel called cash We know about the trillions in the government sector. This is an amount well in excess of any projected debt levels in Beijing's budget. The South China Morning Post’s Tom Holland looked more closely at debt levels and potential bad loans that could boost total debt to a worst-case 55% of GDP, about the same as Britain. However, one must remember that the economy and tax revenues are growing solidly -- plus Beijing has no shortage of assets to set against its liabilities. So even with the concern over the GDP/government debt ratio, they have the cash – a crucial difference that make China like a corporation with $1
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