A Risk For The Chinese Economy

Here is a Quote from the New York Times on the recent World Bank Report given in Beijing.

The World Bank said, The greatest risks facing China’s economy, the authors say, may not be external shocks like global economic weakness, but internal structural challenges, like weak domestic consumption, overinvestment in infrastructure and rising inequality among its people.

Internal challenges and a weak external environment are a big problem.  I would also add a blooming unavoidable labor shortage, and the New York Times article has more to say as well. The World Bank made a forceful and surprising statement on the urgency of Chinese reform.  

The China Performance Group can represent the optimistic side

In my opinion there are reasons to be optimistic. China’s leaders are focused on China’s success. Unlike the leaders of some other nations, they are professional, which means they spend their whole life studying the challenge and finding appropriate, timely solutions to it. They are also meritocratic in their own way, and those that make it to the top are highly respected. Over the last 30+ years I have observed China getting itself out of very challenging situations. I have studied China’s leaders carefully and met some of them. Most of them were impressive.

And remember The Coming Collapse of China?  Gordan Chang made a bold prediction in this 2001 book that China would crash very soon.  Far from it. Years later the West crashed.    It is fascinating to me that Gordan Chang stays in the news after being so totally wrong based on his own subjectivity.

I also have met at times with high government officials and have always found them to be very smart. They are more clear on these issues than we are, and they do not want to become a big Malaysia.

I sense they will find a way up and out, but they are already getting behind as they hesitate in reform at the wrong time and are missing about 300 million young laborers to power this critical 20 year stage, 2012-2032.


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