I agree, China is a dam waiting to burst. The only question is whether it will explode or crumble.
Maybe not right away, but within 20 years. I'll put money on it. -- Ernie P. On Oct 6, 2011, at 1:53 PM, [email protected] wrote: > > > > October 6, 2011 > Forget Greece, Keep Your Eye on China > > By Moises Naim > While the world's attention remains glued to the crisis in Greece (population > 11 million), in China (population 1.34 billion) things are going on that we > are mistakenly overlooking. Should the world's economic engine stall, the > consequences would be much more serious than any Greek problem, even taking > into account its impact on the wider European economy. Here are a few boring > facts about what is happening in China: manufacturing has fallen for the > third consecutive month; the construction boom is about to bust; property > prices are falling, and companies in the sector are finding it hard to access > financing. Local government debt is now equivalent to 27 percent of the > economy, and experts say that 80 of that debt cannot be recovered. Share > prices of Chinese companies on the New York Stock Exchange fell on the news > that regulators found serious faults in their accounts. > > The Financial Times' summary is a little less boring: "A sector that was > until last year the darling of international investors is turning into a > horror show [...] a development that would send shockwaves through financial > markets worldwide." > > > Does this mean that China is headed for a crash? Not necessarily. But there > is a strong possibility that China's economic growth is set to be derailed. > The accident could be financial, environmental, social, or international. A > collapse on the stock exchange that would wipe out people's savings, or some > kind of infrastructure disaster that would prompt millions to take to the > streets in protest, could be the spark that sets off a crisis that would > eventually hit the economy. And that would then quickly spread around the > world. > > The social and political contract the Chinese Communist Party has with the > people reads like this: we create millions of jobs and promise continued > prosperity for you and you let us govern without you playing any part in the > process. If job creation stutters so does the regime's legitimacy, and its > ability to govern centrally as it has until now. There are other factors at > play as well that could have dangerous political consequences: inflation, > inequality, and corruption. Over the last decade, inflation has rarely risen > above two percent a year. It is now at 6.2 percent, while food prices, the > most politically explosive factor, have risen even higher. > > Inequality before the boom was limited, and invisible to most people. It is > now among the worst in the world. Urban workers earn three times more than > peasants in rural areas, and the number of Chinese people among the > wealthiest in the world breaks new records every year, while China's > millionaires are, on average, around 15 years younger than those in other > countries. Corruption has long been a problem, but it is now increasingly > widespread, and far more visible, and affects almost all areas of life. The > government has tried to stem the flow of graft. But highly publicized jail > terms and even the death sentence for public officials are simply not working. > > Economic crises tend to turn corruption from an irritation that can largely > be put up with, even over long periods of time, into a powerful popular cause > that rallies the population. We should remember that corruption was a > determining factor in the downfall of the previous regimes in Tunisia and > Egypt. The same applies as regards mounting environmental problems, which for > many Chinese are not merely abstract issues. After a while, people get tired > of turning on the tap to take a bath or make a cup of tea only to find that > brown, foul-smelling water comes out. According to Sun Liping, a sociologist > at Tsinghua University, there were 180,000 street protests against a > multitude of issues in 2010. The Chinese are increasingly prepared to take to > the streets to demand their rights. If this kind of activity starts to impact > the economy, then what happens in China will affect us all, and much more > than what is going on in Greece. > > > -- > Centroids: The Center of the Radical Centrist Community > <[email protected]> > Google Group: http://groups.google.com/group/RadicalCentrism > Radical Centrism website and blog: http://RadicalCentrism.org -- Centroids: The Center of the Radical Centrist Community <[email protected]> Google Group: http://groups.google.com/group/RadicalCentrism Radical Centrism website and blog: http://RadicalCentrism.org
