TW: China has become the latest Japan (i.e. the next great power). China given its entrepreneurial skills, high savings and a billion people may in fact be the next great power (Japan btw had the high savings but neither of the other two attributes). But China's emergence remains a work in progress, an effort that risks serious setbacks during the current worldwide economic imbroglio. There are numerous emerging data points suggesting the Chinese economy (like ours) is hitting a brick wall. The Chinese currency is now depreciating and output indicators are falling almost as rapidly as our own.
From Pethokoukis at US News&World Report:
"...Slower growth could lead to dangerous political instability. The sole source of the authoritarian government's legitimacy has been its ability to deliver an even-rising standard of living for more than a generation...This is why China has been hesitant to allow any dramatic appreciation by the yuan vs. the dollar. To the extent that a stronger currency slows the economy, the ruling Communist Party views a rapid yuan appreciation as an existential threat...
Let's remember that China a) has been -- along with America -- one of the primary engines of global economic growth as well as buy of U.S. bonds, and b) has nuclear weapons. While no freedom-loving member of Western Civilization has any love for the current despotic regime, neither do we want to see political and economic chaos in China. Fun China Fact: Back in the 1990s, Pentagon analysts thought a bad economy could result in the fall of the Communists from power and the political dissolution of the country into maybe a dozen smaller nations..."
http://www.usnews.com/blogs/capital-commerce/2008/12/1/bad-economy-could-cause-china-crackup.html?s_cid=rss:capital-commerce:bad-economy-could-cause-china-crackup
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