This might be the most mind-blowing fact I learned this year: http://t.co/jJB3cEoq7j pic.twitter.com/Dr34RLeJbU
— Bill Gates (@BillGates) December 12, 2014
China has been on a record-breaking infrastructure binge over the last decade, but that era is coming to an end. Fall of the Baltic Dry Index below its 2008 low illustrates the decline of bulk commodity imports like iron ore and coking and thermal coal, important inputs in the construction of new infrastructure and housing.
High-end commodities like copper held up far better since 2008, but they too are now on the decline.
With the end of the infrastructure boom, China’s economy may well prove to be a one-trick pony. Transition from a state-directed infrastructure ‘miracle’ to a broad-based consumer society will be a lot more difficult.
Where does leave the Australian economy and the Australian property bubble ? is it about to pop!
The resources bubble has already burst, but most other sectors are unaffected. The property bubble will only come under threat when interest rates rise.
rise in interest rate might still be years away before the breakdown of Euros
The Chinese population rapidly urbanised in last decades to point where now just over 50% of population reside in urban centres. That was one off historical event, with vast demand for concrete and steel to create necessary array of infrastructure. Photographs of any major Chinese metropolis from say, 1995 to 2015, show the absolutely staggering scale of construction in period. But it was never an indefinite process, and assumptions of the good times rolling for Australian resources was never really publicly disputed until the recent end of the cycle. China still needs resources for basic manufacturing, but it won’t have that type of systematic demand again in our lifetime.