China is currently in some economic difficulty which could impact internal stability and some feel that the global megapower is planning to utilise gold to reboot and pick its way out of an economic meltdown.
by Lawrence Williams
LONDON (Mineweb) – One thing that is most apparent about China relative to virtually any industry is that nothing is done without the approval, or instruction, of government. When you have an enormous population of over 1.3 billion – around 20% of the global population – the government’s policies are all aimed at maintaining order among its people, and for the past decade or so this has revolved around massive internal growth. This has been done, first by becoming the world’s supplier of cheap goods, and second the building of an internal demand economy to help support this massive annual growth.
Nearly half the country’s population has moved from the country’s old rural economy into a modern industrial one – but this is now seen as faltering under massive bank debt, much of it in potentially bad loans brought on by government-engendered cheap finance supporting the country’s internal manufacturing and infrastructural growth. Given the Chinese state-owned company aims are not necessarily to make money, but to provide employment, this may not be a sustainable economic model, which could have some dire consequences for those companies, particularly in the resource sector, which have been providing the raw materials that help keep the Chinese factories maintaining uneconomic production levels.