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Can Stimulus Prop Up China's Investment Growth?

Posted Dec 17, 2008 03:52pm EST by Sarah Lacy in Investing, Internet, Media, Networking and Communication, Recession

Chinese-language social networking site FaceKoo (yes, like Facebook) last month surpassed MySpace China in page views, according to Alexa data. But with the global economy easing along with China's phenomenal growth, is China's Internet space gearing up for a bursting of its own bubble?

My guest Calvin Pak, CEO and co-founder of FaceKoo, joined me to discuss China's business climate that's suffering a double blow -- post Olympics high, and the global credit crunch.

(Click "more" below, left for the link to embed this video.)

13 Comments

Anthony
Anthony - Wednesday December 17, 2008 04:07PM EST

What China needs to do is to start investing in its own people. Start creating a huge middle class and demand that comes domestically from within. This means they need to stop buying U.S. treasuries. U.S. treasuries are like the modern day opium for China. Back in the 1800s the British and China engaged in a war over the opium trade. China did not want the opium coming into the country and dumped many barrels of it, but Britain sent their troops in to keep the drug trade going and toppled the Chinese government. Today it is no different. We keep pushing the drug known as U.S. treasuries on them, making more promises and sweetners each time. Someday they will say enough and start investing inward I hope.

Warren
Warren - Wednesday December 17, 2008 04:10PM EST

China 's stimulus is desigend not for prop up the investment to any asset prices bubbles, It is wwell desinged for up maintain 8 % GDP grwoth, prevent it slipping into recession ( 7 % GDP mean recession for China which will loss 10 million jobs. Yes the well designed stimulus infrastructure pragram , boost rural area income, cosnumer spending and buliting nationtionwide railway, highway, electricity network to remove nay lostgics bottelneck in the next stage economic boom while avoided coastal area overheating. details on www.osawh.com/Chinab.html

Reedersong
Reedersong - Wednesday December 17, 2008 04:33PM EST

Let's turn this Mother OUT!!!

Ralph B
Ralph B - Wednesday December 17, 2008 04:52PM EST

Really, the only way any stimulus plan can work. The money invested have to create wealth within the country. Anything other than that, and something similar to the Japanese stimulus will happened. Plain and simple, all stimulus funds should be on minerals, goods and services from within the country. Other than that it can never work.

Li
Li - Wednesday December 17, 2008 04:58PM EST

It will be hard for China to depart significantly from the global slow down. We are entering a downturn of gigantic proportion not seen in decades. What China fears the most is the civil unrest that comes as a result of the increased unemployment. With 1.3B people to manage, Ch

Li
Li - Wednesday December 17, 2008 04:59PM EST

It will be hard for China to depart significantly from the global slow down. We are entering a downturn of gigantic proportion not seen in decades. What China fears the most is the civil unrest that comes as a result of the increased unemployment. With 1.3B people to manage, China is walking a tight rope. Every mis-step can result in a a disastrous consequence. Misfortunes feed on misfortunes, I just cannot see a speedy turn-around for China or any other country. The worst is yet to come. Let's hope that this will not be the catalyst for a WWIII.

American Way
American Way - Wednesday December 17, 2008 06:13PM EST

If there is any country that can lead the world out of the economic crisis that would be China. I've seen the investments and growth that going on as well as a new consumer class. Its small in the overall picture, but growing. Being there is like an immigrant seeing New York on the boat after the long journey from Europe. This is the type of investment the US needs badly, but instead the US has gone to a Japan style economy where every company is too important to fail. This will only weaken the US economy even more.

Ben
Ben - Wednesday December 17, 2008 06:43PM EST

Pak maybe needs to stop watching horror flicks...

Nick
Nick - Wednesday December 17, 2008 06:55PM EST

Is this the same Sarah Lacy that we know? Gosh, she is actually acting like a broadcast journalist now. What happened to the weird looking outfits? The gaudy hair wraps? The way she used to bounce up and down in her seat? She actually seems respectful and professional. What a change (for the better)!

__A_YAHOO_USER__
__A_YAHOO_USER__ - Thursday December 18, 2008 02:32AM EST

Yes, the another revolution.......This time the movement of capital and man-power and infrastructure investment that is the new conventional revolution............A battle for growth and progress........It is not only China but United States and the rest of the world largest economies in one accord to make the economy moving............Will it worked ..........the my response .......yes

you
Yahoo! Finance User - Thursday December 18, 2008 04:20AM EST

It is interesting how language influences culture and vice-versa. As you know there has been a lot of requests from the west for China to help bail out the U.S, but China has insisted on reinvesting their surplus back into China, pumping money into infrastructure, schools, hospitals, etc... Well, the Chinese word for "crisis". Crisis is pronounced weiji and is made up of two Chinese characters 危 and 机. 危 directly translated means danger and 机 directly translated means opportunity. The Chinese government subsequently perceives this crisis as a time to be cautious, but if a good strategy can be derived it can lead to opportunity. This said, China is not going to bail out the U.S. as blindly as we bailed out our financial industry. If we want China’s help we need to make it opportunistic for them to bail us out, otherwise they will continue investing in China and building their middle class and position China to be the next world superpower after the fall of America.

__A_YAHOO_USER__
__A_YAHOO_USER__ - Thursday December 18, 2008 05:12AM EST

China and America is just even it is good to do business in China as long as you know the culture and the tradition of the urband and rural population......If You will learned it is good to have business with them....The British is well ahead of us in this business...Will we catch up the answer is yes......

MichaelM
MichaelM - Thursday December 18, 2008 06:54AM EST

China buys US Treasuries because they have to balance the inflow of US currency. They are still experiencing strong growth its just not double digit. What idiot Americans need to realize if they want to turn our economy around is that we as people not the government need to invest in America. We need to stop buying foriegn goods and buy domestic. Create better paying jobs in manufacturing for our neighbors not jobs at McDonalds. But no we keep shopping at Wal Mart and pouring tens of billions of dollars into China.

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