Is China's Economic Miracle About To End?

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The End Of The Chinese Economic Miracle -- George Friedman, Real Clear World/Stratfor

Major shifts underway in the Chinese economy that Stratfor has forecast and discussed for years have now drawn the attention of the mainstream media. Many have asked when China would find itself in an economic crisis, to which we have answered that China has been there for awhile -- something not widely recognized outside China, and particularly not in the United States. A crisis can exist before it is recognized. The admission that a crisis exists is a critical moment, because this is when most others start to change their behavior in reaction to the crisis. The question we had been asking was when the Chinese economic crisis would finally become an accepted fact, thus changing the global dynamic.

Last week, the crisis was announced with a flourish. First, The New York Times columnist and Nobel Prize-recipient Paul Krugman penned a piece titled "Hitting China's Wall." He wrote, "The signs are now unmistakable: China is in big trouble. We're not talking about some minor setback along the way, but something more fundamental. The country's whole way of doing business, the economic system that has driven three decades of incredible growth, has reached its limits. You could say that the Chinese model is about to hit its Great Wall, and the only question now is just how bad the crash will be."

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My Comment: Regular readers of this blog know that I am a "China watcher". I have been visiting China on a regular basis since the mid-1980s, and I have been lucky to have done some business in China in the past and to establish some lifelong friendships. George Friedman's analysis on what is happening in China is spot on. I noticed the first signs of problems about 2-3 years ago that were reinforced by the opinions and concerns of my Chinese friends .... and now .... after 30 years of massive growth .... the signs are unmistakable .... the years of double digit growth are now over. George Friedman's post is a long rad but it is a must read .... especially if you are someone who is interested in China.