Lots and lots of people are predicting China will crash, though The Money Illusion doubts it. Supposedly, debt fueled construction, decreed by central planners, Soviet style, is sixty percent of GDP – except that there is absolutely no evidence that this remarkable statistic is true. It is not an official government statistic. Where does it come from? If it was sixty percent of GDP, most of the population would be working in construction, which obviously they are not.
People want to believe that China will crash.
Who wants to believe that China will crash?
The people who believe that China will crash also believe that China is a command economy, which obviously it no longer is, except in the sense that Europe is a command economy, and America has recently become a command economy. They also believe in Soviet growth statistics – that the Soviet Union grew just great, at least at first.
Further, those who believe that China will crash, also believe it has already crashed: that China’s prosperity is based on forcing
peasants into grinding poverty in sweatshops on two dollars a day, that China has no middle class (hence the supposed absurdity of the present building boom in china creating vast amounts of middle class housing, offices, and shops), and that Cuba’s quite astonishing health statistics are true.
Their beliefs about China are incoherent, internally inconsistent, and mutually contradictory, showing that they don’t really believe what they believe. I suspect that what they really believe is that basing a society on self interest is morally wrong, and therefore must surely be punished by the heavens. Obviously the right way to run a society is to put people like themselves, who know what is good for society, in charge and then make everyone else do what is good for society, and any society that allows greed to run riot is obviously doomed. Therefore, they subconsciously think, China is obviously doomed, due all the rampant greed that is not properly restrained by good government.
I just don’t hear any one who confidently and sincerely believes that self interest is the proper basis for a society, predicting doom for China.
No doubt China will have a recession, sooner or later. No doubt some speculators will lose their shirts, sooner or later, for in a free economy, speculators take risks, unlike America where the elite gets bailed out by taxpayers when they bungle, but China is growing mightily, and will continue to grow mightily, with the usual minor interruptions from time to time.