I advised the chinese a few months back , that increasing interest rates alone without reshaping housing taxes will hardly stop the housing bubble while decelerating industrial output .
There you are , the buoyant chinese industry almost in recession for not following my advice .
There is of course another factor producing imbalances that affect the competitivity of chinese production . It is the type of inflation caused by the bursting purchassing power of a reduced percentage of the chinese population .
Inflation caused by that minority is causing a strong inflation that is inevitably followed by generalised salary increases to quench the unrest of the suffering mayority . Taxes here would have been necessary .
Liberal policies are nececessary up to a certain level . The wise economic policy will be based in the stimulus to the creation of companies with high added value and the building up of a healthy and wide medium class . As GDP is based in a very reduced percentage of population with extraordinary incomes , economy is simply bound to generate deep imbalances .
Brahmason
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