China's troubles: Mimicking America
Trouble for China's economy — growth slowing dramatically, government debt mounting, real estate showing signs of a “bubble,” weak financial-sector controls enabling risky lending — means trouble for the global economy. And it shows that even in a nation ruled by central-planning Communists, short-term “stimulus” is no recipe for long-term prosperity.
Flagging those warning signs in its latest annual report on China's economy is the International Monetary Fund. It says the “mix of investment, credit and fiscal stimulus” China has relied on since the global financial crisis “is not sustainable and is raising vulnerabilities,” according to The New York Times.
China's annual economic growth peaked at more than 14 percent in 2007, pre-crisis. Today, it's about 7.5 percent — and the IMF says that without big, systemic changes soon, China might not be able to sustain even that level of growth.
With its currency and labor-cost advantages less than they used to be, weakening exports, Beijing knows that China needs more domestic consumption for better economic balance. Yet its infrastructure spending — “stimulus” — continues to grow as a share of China's economy.
In some ways mirroring the U.S. experience during and since the global crisis, China's situation shows that basic economics applies regardless of ideology. Unchecked, reckless lending inflates “bubbles” that burst disastrously and “stimulus” provides only temporary, illusory “growth” — whether it's Beijing or Washington at the controls.
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments â either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.