Monday, March 09, 2015

Is China Going to Implode?

Remember my Five Pillars of the New Financial Reality, a quick and dirty guide to investing reality for this early 21st century?  Of course you do.

Well, #4 was "The Future Does Not Belong to China."  Here's what I said:
Also, to believe that the future is Chinese, you need to believe that something like 250,000 elderly communists can successfully plan and manage an $8.4 trillion economy for the benefit of 1.3 trillion people.  No way.  If leadership doesn't screw it up, China will grow acceptably but always be an economic follower.  If they screw it up, well, China explodes.  Heads China loses, tails they tie.  Bad bet.
This weekend's WSJ Review section's front page feature was the "The Coming Chinese Crackup."  It's a good read and lends credence to my view.  You only need to hear stories of Chinese buying up real estate with suitcases of cash to see Shambaugh's point.  For example, that building boom along the Gardiner in Toronto is supported by oceans of Chinese cash.


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