That’s the title of Time’s recent article on China’s bubble. You can find out more on this subject by watching Jim Chanos’ video interview here.

 

What’sthe most important economic question in the world today? One contender is whether the euro will collapse. Another is whether the U.S. will plunge into a double-dip recession. But a third, and possibly the most important over the long term, is whether China can save the world–or whether the entire country is a $6 trillion bubble that’s ready to pop.
That’s the size of the Chinese economy, now the second largest in the world, after the U.S.’s. China contributed 19% of global economic growth in 2010, and that’s expected to increase to 24% this year. China’s strength is essential to the recoveries of both the U.S. and Europe; if Beijing crashes, the reverberations will be felt from Boise to Brussels.
And plenty of smart people are worried that it will. It may seem strange to Americans who hear so much about the rise of Asia and the pressure of Chinese competitiveness, but there are big questions about China’s future. For more than 30 years, the Chinese miracle has been built on cheap labor, cheap land and cheap capital. But the model is starting to break down. China’s banks,which have doled out too many bad loans, are perhaps as troubled as those in the West. The frothiness of the real estate market in major Chinese cities makes the U.S. housing peaks of 2007 look positively staid. Inflation is growing, as are unemployment–particularly among the middle classes, for whom,as in the U.S., there aren’t enough high-level jobs–and social unrest. China’s own Premier, Wen Jiabao, calls his nation’s economy “unbalanced,uncoordinated and unsustainable.”

Full article here. Original article here.

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