Stratfor doesn’t leave much room for positive developments in a recent article by Rodger Baker titled “China’s Economy: Crash or Slow Decline?”
Even if the central government came up with a brilliant plan for a massive restructuring of the economy, it is unlikely to be implemented locally. Beijing has difficulty squeezing money out of the profitable coastal provinces to fund development in the inland provinces, where the urban-rural gap continues to grow and social unrest boils over much more regularly.
When Beijing tried to slow lending in 2004, it was unsuccessful; local and regional banks and governments simply made up for the reduced money coming from the center. The unrestrained investment the IMF worries about is caused by local governments that are thinking and acting for themselves, and as their interests coincide more with foreign investors than neighboring provinces, Beijing’s grip will continue to slip. This ultimately will undermine the central government’s economic plans, no matter how brilliant those plans are.
Meanwhile, Slate has a mildly amusing series about an investment banker-come-journalist is trying to find out what the big deal is about China. (It tilts back and forth between being great and awful, but at least he’s honest: he admits he knows nothing about China and we learn about the country with him.) His recent take on making money in China is not a new one, but it is interesting to hear it restated this way.
You can’t take it anymore. All this yammering about how much money everyone is making in China. (You don’t know anyone actually making money in China, but from what you read, hear, and see, you gather everyone is.) Real estate, cell phones, video games, chewing gum, cement””?1.3 billion people, it seems, are in the process of striking it rich. And China is not some silly hallucination like the Internet. China is “¦ China””?the next great economic superpower, the biggest growth story in the history of the world. You can’t afford to miss it.
China’s growth continues to skyrocket, but you can’t find a cheery picture anywhere.
