This interview with Australian journalist Dinny McMahon at Knowledge@Wharton touches on a number of topics I’ve commented here on The Glittering Eye over the last 15 years including the sources of Chinese economic growth, the graying of China, and just how much of a house of cards everything is. For me here’s the kernel of the interview:
Knowledge@Wharton: Is the end of the Chinese Miracle in sight?
McMahon: In my mind, the miracle’s already over. The reason I say that is what has been allowing the Chinese economy to grow so quickly over the last six or seven years has been that the accumulation of debt has been faster than the economic growth. That is not sustainable, and that’s not a miracle. That’s just alchemy. The issue is what happens next in the economy. I don’t know exactly what will happen. Firstly, I think the reality is that China will become the global power we assume it will. But it’s certainly not a foregone conclusion.
When I wrote my series on “China’s time bombs” thirteen years ago, I was optimistic about the ability of the Chinese government to address its most pressing problems including demographics, environmental degradation, and its financial system. Over that period the Chinese authorities have done very little to come to terms with those problems and their potential impact on the rest of the world is much worse.
Now the questions are whether those problems fall on China with a bang or a whimper and how the rest of the world and the U. S. in particular deals with the changes that will inevitably come to China.
