Tuesday, September 12, 2006

Investors Keep China's Development on the RIse; They May Soon See Their Boom Become a Bust

With China on top as the leader in foreign investment it is beginning to cast major doubts about it's instant economical boom. According to a study released Wednesday, Asian countries attracted $177 billion of foreign direct investment and China receiving 45% of that with $79.1 billion. Economists expect China to remain in the forefront of foreign investment despite many fears that China's economic boom is at the expense of others. With Asian economic development at astronomical rates many fear rising oil prices are directly related to China's rapid growth. According to National Geographic Online, China's oil consumption grew at 11% and is now the second largest oil consumer behind the United States. Economic theory states that with an increase in demand buyers will bid the price of a supply to a new price point. Increased prices of oil are currently set at a point accommodating China's demand. With growth on the rise the prices for oil and other resources are destined to increase concurrently with China’s maturation. During the 1980's China's private automobile ownership was virtually 0, by 2003 the total was estimated at 14 million. "The potential number of Chinese people who could become consumers in the future is enormous," stated Lisa Mastney the project leader of Vital Signs 2005, leaving many to wonder exactly what impact the constant expansion will have on the environment, resources and foreign investment. The long term externalities are unknown but many feel that China's economic boom will soon bust leaving investors such as Stephen Wynn and Sheldon Adelson with billions on the table. China's infrastructure is not sufficient enough to handle the migration to urban areas resulting in complications with sanitation, land availability, resources and pollution. According to National

Geographic Online “Large cities, including Beijing, are smothered in smog. Old and weak people are often warned to stay indoors. Between 2001 and 2020 almost 600,000 people in China are expected to suffer premature death every year due to urban air pollution.” With China leading the world in foreign investment and expecting to attract 80 billion in 2010 investors seem to be engaging war upon themselves through competition for land and resources. China may never see it's 80 billion in 2010 and could soon drop off the list of foreign investment due to the inability to handle such an influx of cash flow, "Public health, social stability, and continued economic growth are all at risk as China continues to pollute its way to prosperity."


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