Harvard University Professor Kenneth Rogoff said in the speech at a forum hosted by CLSA Asia-Pacific Markets that China’s economic growth will plunge to as low as 2 percent following the collapse of a “debt- fueled bubble” within 10 years, sparking a regional recession:
“You’re not going to go a decade without having a bump in the business cycle. We would learn just how important China is when that happens. It would cause a recession everywhere surrounding the country, including Japan and South Korea, and be horrible for Latin American commodity exporters."
Rogoff added,
“Their response to the latest financial crisis clearly raised the risk that they have a debt-fueled bubble in the economy”
While Rogoff said he isn’t sure what will cause China’s bubble to pop, he said land is “the best bet” as it is “the most common source” of crises. Real estate values in Shanghai and Beijing have “taken a departure from reality”. he joins Jim Chanos, Jim Rogers and Marc Faber in that claim.
Rogoff is the former chief economist at the International Monetary Fund.
Related ETF`s: ishares FTSE/Xinhua China 25 Index (ETF)
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