Earlier, I pointed out that the drought in China along the Yangtze River region is now becoming the worst in many years. Some people blamed the Three Gorges Dam, noting some correlation between building large dams and droughts in neighbouring regions, although it is too hard to say with absolute certainty that it is the case.
Whatever causes the drought, some people raised concerns on the China drought situation and its impact on the economy. At the moment, quite frankly, I have very little idea on how serious the problem can be, except that I suspect it is not going to help with the inflation situation, particularly the food prices inflation in near term.
The big China bull Jim Rogers said earlier that the water problem, if not properly solved, will mean the end of the China story. Bill Bishop, who described himself as in the “China can muddle through” camp, agrees that the drought is a game changer.
In his own words, Jim Rogers said:
I don’t mind if China has civil wars, epidemics, panics, depressions, all of that. You can recover from that. The only you cannot recover from is water… China has a horrible water problem in the North… If China doesn’t solve its water problem, there is no China story. I’ve been around the world for a couple of times. I see whole societies, cities, countries, disappeared when the water disappeared.