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Thursday, March 10, 2005

China imploding?

China is growing rapidly - this is a clear fact. It is also clear that the Chinese government has been able over the last two decades or so to manage their economy pretty well, in the sense that they were also able to cool down, when required.

Currently, new efforts are ongoing and probably needed due to Chinese ferocious appetite for growth, which consumes vast amounts of resources (and puts inflationary strains on other economies in need of those as well - but I digress).

Clearly, there is always the danger that the country's growth creates economic or sectoral bubbles that might burst. Strategic Forecasting Inc. , a leading private intelligence service. They are basing their assumption on "an estimated $500 billion in bad debts threatening its banking system, rapidly rising unemployment, rampant government corruption and mismanagement, and foreign investment dwindling."

Looking ahead until 2015, they are saying that "China's economic growth continuing to decline, leading to an increase in internal tensions, social upheaval and violence, which the central government in Beijing may be unable to control after 2008."

That is surely not in the cards of the Chinese government, which recently published its Vision 2080.

True or false - that is the question. Who is betting on the right horse?