I’ve posted before about the Chinese real estate bubble, and what will happen when this bubble bursts.
Rather than worshipping the Chinese economy like Obama does (high speed trains anyone?), we should be recognizing that the Chinese model, like the Soviet model, is artificial and contrived. There is only so much that can be controlled and planned from the top down.
Walter Russell Mead (via Instapundit) has more on the decline of Chinese growth rates:
Hold on to your seats; according to The Conference Board, perhaps the most important business oriented forecasting group in the world, revolution is coming to China.
That’s not what the group’s latest global forecast says literally, but this or something like it is the clear meaning of the forecast that China’s growth is likely to slow to 8.7 percent next year, 6.6 percent in each of the four years after that, and then average 3.5 percent per year between 2017 and 2025. It has long been an article of faith inside China and among most China watchers that the country needs 9 percent growth per year to avoid widespread instability.
This does not have to be the Chinese century, unless we want it to be. Or unless we try to be China.
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The Chinese economy is founded on the short-term advantages of expediency. Long-term healthy economies are founded on efficiency. You can only lie, steal and cheat your way so far before reality introduces itself and spoils your party.
Obama embraces the Chinese and European economies, just in time to hitch a ride to Perdition.
Anyone who believes the contrived numbers coming out of the Communist Party in Beijing is absolutely notes! Isn’t it amazing how the growth is ALWAYS 8%?
China is going to pop eventually and when it does it has huge implications for US deficit spending. After all, if they can’t or wont buy our debt, who will? And what happens when we cant refinance our current debt because nobody will buy new bonds and bills?
If communism worked the Soviet Union would have been the world’s leading economic power…
If you also factor in the negative population demographics from their inhumane forced abortion policies, they are screwed. The upswing from population control only lasts for so long before the downside comes rolling in.