The cracks are starting to show.

In its almost irrational desire to urbanize faster than a speeding bullet, the Chinese government is pulling rural farmers off their land and shoving them into an urban environment they’re completely unprepared for.

Only a fraction of the newly-displaced young people have jobs. The rest now spend most of their time in Internet cafes playing games.

The elderly are forced to take menial jobs, like street sweepers or janitors, for a measly $150 a month.

These people were supposed to receive $1,500 in training. Of course, they’ve not seen one red cent of that.

And those who do get better jobs often have to travel long distances because there are few jobs available in the new towns and cities they find themselves in.

Inflation is raising their cost of rice… a vital food they once produced for themselves for almost nothing.

Suicides and age-related, terminal illnesses are on the rise.

And for all, the standard of living has dropped.

As we’ve warned: Inevitable cracks are forming in China’s urbanization effort…


So what’s the Chinese central government’s motivation here?

They want to move people to urban areas where they can earn and spend more. The problem is they’re moving people with no skills, especially the older ones, so their earning potential is limited, which in turn limits their spending power.

And what’s the local (mafia) government’s motivation?

Well, they sell the recently-vacated farm land to developers and then use those funds to finance buildings for the new urban residents. Plus, from those people who are able to find good jobs, local governments also get tax revenues and new businesses spring up for their crony business friends.

But outside of the new towns, the surrounding farmland remains mostly empty, lying fallow as proposed developments gather dust on the shelf and excavation machinery stands idle.

Then there’s the under-appreciated problem that many rural households don’t want to move to these cities. They don’t want to uproot a way of living they’ve had for centuries.

Local governments don’t care. If the people don’t move willingly, those in power stoop to cutting off roads, water and electricity to force them out.

With all of that said, I must clarify that I don’t want to create a one-sided story here…

China’s rapid urbanization has taken many people out of poverty and raised the average standard of living from $2,000 per capita decades ago to $9,000 per capita adjusted for purchasing power today. Many people in China’s cities are earning between $5,000 and $20,000 in incomes.

However, my concern is that China is now pushing urbanization at such a rapid rate that it will inevitably backfire. It’s like recklessly gunning your 300CC motorbike engine to speed faster down the hill. There’s no question you’ll eventually hit a speed wobble… and there’s no way that would ever end well.

Plus, such government-driven processes are prone to high corruption. They’re creating a permanent underclass of people who are often not even registered citizens (already 221 million people and rising rapidly) and have no access to education, health care and social services.

At the same time they’re creating an unaccountable upper class that benefits from being connected to the corrupt, communist party, especially at the local level of politicians and crony businesses; not to mention the huge state-owned enterprises that are incredibly inefficient.

And after moving about 250 million people to cities in the last 12 years, China plans to move another 250 million in the next 12 years.

They’re nuts!

China’s stock market tells the real story here…

It crashed 70% in 2008 and managed only a brief and feeble rebound into February 2010 before resuming its downhill course.

This is a B.S. economy. Period!

China’s a disaster waiting to happen. It’s putting the cart before the horse, forcing unprepared and reluctant people into urban areas in the hopes that they’ll earn and spend more.

But overexpansion only leads to lower profits.

As China continues on its insane urbanization path, the cracks will only widen and the risks of a global catastrophe rise.

Don’t fall victim to the inevitable here. The Chinese crisis that I see barreling toward us will dwarf the U.S. subprime crisis.

Protect your assets by early 2014.


P.S. Usually I share details of my forecasts with you, but today I want to tell you more about how it all began. Listen to this.

Follow me on Twitter @HarryDentjr


Ahead of the Curve with Adam O’Dell

Join! For This Reason Alone

The chart I’m about to show you has proven itself as an uncanny predictor of market crashes.

Don't Buy a Single Ounce of Gold Until You Read This Book!

The economist who predicted the 2008 Meltdown, 13 Years BEFORE it happened, is releasing his latest research on the future of gold prices, which are set to collapse further than you ever… Read More>>
Harry Dent
Harry S. Dent Jr. studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of his chosen profession that he turned his back on it. Instead, he threw himself into the burgeoning new science of finance where identifying and studying demographic, technological, consumer and many, many other trends empowered him to forecast economic changes. Since then, he’s spoken to executives, financial advisors and investors around the world. He’s appeared on “Good Morning America,” PBS, CNBC and CNN/Fox News. He’s been featured in Barron’s, Investor’s Business Daily, Entrepreneur, Fortune, Success, U.S. News and World Report, Business Week, The Wall Street Journal, American Demographics and Omni. He is a regular guest on Fox Business’s “America’s Nightly Scorecard.” In his latest book, Zero Hour: Turn the Greatest Political and Financial Upheaval in Modern History to Your Advantage, Harry Dent reveals why the greatest social, economic, and political upheaval since the American Revolution is on our doorstep. Discover how its combined effects could cause stocks to crash as much as 80% beginning just weeks from now…crippling your wealth now and for the rest of your life. Harry arms you with the tools you need to financially prepare and survive as the world we know is turned upside down! Today, he uses the research he developed from years of hands-on business experience to offer readers a positive, easy-to-understand view of the economic future by heading up Dent Research, in his flagship newsletter, Boom & Bust.