China, the Bubble Kingdom

China, the Bubble Kingdom

Meanwhile, after decades of policy-based lending, China is more of a bubble kingdom than a Middle Kingdom. We’re seeing housing bubbles, manufacturing bubbles, infrastructure projects that can never pay for themselves, malls that will never bring in enough revenue to cover the cost of construction, and whole regions (like the Northeast) where rust belt industries are on life support and state-driven lending for the construction of buildings that have no real commercial or residential use are the only things keeping the economy from tanking. There are so many bubbles, and they are so vital to the prosperity and thus to the political tranquillity of the country, that the government seems to have reached a place where it is equally unsafe to stand pat or to move.

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