June 3, 2014

What Is China's Biggest Weakness?

William Pesek, Bloomberg

The Associated Press

China's debt reckoning is coming. Maybe not this quarter or this year, but Chinese President Xi Jinping's unbridled effort to keep growth from falling below the official 7.5 percent target is cementing China's fate. China is investing just as much as it did in 2008 and 2009, when authorities were desperately trying to avert a slowdown. Just as debt troubles in Japan, Europe and the U.S. ended badly, so will China's. Why, then, with so many clear examples of financial excess leading to ruin, is Xi continuing down this road? Blame it on the ghosts of Tiananmen Square.

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