Walter Russell Mead points out that the supposedly unstoppable Chinese juggernaut has run into a rough patch. Although in the past, the Chinese were able to fuel their economy through deficit spending, they are now held back by “local government indebtedness, massive bad loans hidden in the banking system, anemic external demand, and diminishing returns from investments” from further economic growth through Keynesian stimulus. Add the demographic time bomb that the Chinese are facing, rising healthcare, labor and pension costs, and the fact that a backlash from environmentalists is hampering further development, and the Chinese have got trouble on their hands.
I write none of this with a happy heart. I don’t want the Chinese to be poor and downtrodden. It’s neither good for them, nor good for the rest of the world. But the situation is what it is, and it certainly is worth noting. Equally worth noting is the fact that I told you so. Really, I did. And as my blog posts make clear, so have a lot of other people.