June 21, 2006
The looming China crisis
George Friedman at StratFor is not a believer in the Chinese economic boom. He looks at the problems China faces in its transition to a market economy, models for dealing with these problems and the domestic and international political implications. You may not agree with his analysis but it's thought-provoking reading.
China: Crisis and ImplicationsThe rest is continued below the jump.
First, and most important, it would result in a massive increase in unemployment. At this point, the irrationality has been going on for years. It is not only state-owned enterprises that are economically unsustainable; many newer enterprises, including those in which Western companies have invested, are not succeeding. When we look at the figures for nonperforming and troubled loans, they amount to nearly half of China's gross domestic product. That represents a lot of irrationality, a lot of financial failures and a lot of unemployment. And unemployment is a political and social problem. The question is whether China politically can afford the economic solution.posted by Simon on 06.21.06 at 09:18 AM in the China economy category.
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"it will implement procedures to rein in foreign acquisitions at low prices to block fire-sales of Chinese companies."
Oh the downside of having an artificially low exchange rate in order to export, export, export.
The author misses the point.
There is no need to compare with the Japan, South Korea or Indonesian model.
Just like no one would've predicted China's current economic model, its future is also unpredictable.
It will be the "China Model".posted by: b on 06.21.06 at 06:25 PM [permalink]
Almost everyone involved with China can agree it is not the economic or political monolith usually portrayed in the Western media.
But this analyses is based on so many assumptions that may or may not be correct and on so many predictions that may or may not come true that it is really nothing more than one persons's finger in the wind prediction of China's future.
Is there any evidence that these sorts of predictions are any more reliable than an 8 ball?posted by: China Law Blog on 06.21.06 at 11:25 PM [permalink]
Oh Simon, why do you keep quoting from Stratfor?
George Friedman's prognosticative abilities are so poor, he can't hit the figurative broad side of a barn from two feet away.
This was the man who fortold the that the U.S and Japan would have gone to war, in fact he wrote a whole book about it. He also wrote in an earlier article that China was facing the dreaded crisis of ethnic Manchurian separatism.posted by: Jing on 06.22.06 at 04:02 AM [permalink]
Hmm I should more precisely say that he predicted the U.S. and Japan would go to war in the 1990's.posted by: Jing on 06.22.06 at 06:12 AM [permalink]
Jing, I didn't say I agreed with him. I just said this kind of thing is thought-provoking, and it should be noted that plenty of influential people do agree with him.posted by: Simon on 06.22.06 at 08:14 AM [permalink]