Written by William O. Lipinski
The People's Republic of China, a huge economic power in the Far East, planned to dominate every country on earth because of its great economy, but it fell victim to its own excesses.
The world's second-largest economy is failing on many economic fronts.
First and foremost, that system is part capitalism, part collectivism, and part socialism, and it has never been successful and will never succeed because its parts are so contradictory. It is not.
China's second problem is the real estate industry.
Chinese homebuyers' incredible belief that real estate is a “beatable investment” has propelled the country's real estate sector into the backbone of China's economy.
Unfortunately for China and the Chinese Communist Party, real estate companies have gone bankrupt one after another over the past two years.
This is because people aren't buying new homes anymore and real estate companies have had a lot of fatalities.
The huge debts of real estate companies drive up prices and people stop buying houses. People are also losing confidence that real estate is a solid investment.
Last week, Evergreen, China's largest real estate company, was ordered by a court to cease operations and liquidate. The reason is $300 billion in debt.
No organization or individual, be it the government, investors or real estate experts, has any ideas on how to turn the industry around.
The main problem at the moment is that the Chinese have completely lost confidence in the real estate industry. And it is an industry that has brought enormous wealth to Chinese families.
The next big problem for the Chinese economy is a decline in orders for factories.
Chinese people have lost a lot of confidence in the economy, and consumer sales have fallen for six consecutive months. Because people are afraid to spend money because they don't know what will happen next.
The one-child policy has changed Chinese family life so much that older people in particular are saving money.
Elderly people cannot rely on their children to support them in their old age; they must rely on their own money.
As China spends on its military and invests to rebuild its economy, government welfare and health care are no longer what they once were.
Cut these government services. People have become more dependent on themselves. And it's about government leaders.
Another major issue in manufacturing is the reduction in orders by the United States and European countries.
These countries are starting to manufacture their own products and have other Asian countries manufacture their products.
China has lost a huge number of jobs due to the collapse of the real estate market and a significant decline in manufacturing. This is also a serious problem for the Chinese economy.
In recent years, there has been significant unemployment among university graduates, and now the severe downturn in real estate and manufacturing is causing large-scale unemployment across all age groups. This sparked riots and street demonstrations by the Chinese people, which the government severely suppressed.
This further exacerbated the harsh feelings the people had towards the government leaders. There are other problems with China, but that's enough for this week.
Until next time, thank you for reading this week's column, especially Joe Bonomo. Same American.
(Bill Lipinski served as Democratic Committeeman/Alderman for Chicago's 23rd District. Lipinski was elected to the House of Representatives in 1983 and served until 2005. I write an opinion column called “The Right.'' Email me at BillLipinski@hotmail.com)
Hanania also writes about Middle East issues for Arab News and Arab Daily News, criticizing government policies in the Israeli-Palestinian conflict.
Hanania was named “Best Ethnic American Columnist” by New America Media in November 2007 and received the SPJ National Sigma Delta Chi Award for column writing in 2009.
Email Ray Hanania at rghanania@gmail.com.
Uncensored Follow Ray Hanania on Twitter Gettr.com.Follow Ray Hanania on the new Twitter Gettr
