About that other 800 pound Macro Swan in the room…

Good stuff from the Economist’s cover story and 14-page special report on China’s economy.  Run, don’t walk, to read it.  Here’s a taste,

CHINA’S weight in the global economy means that it commands the world’s attention. When its industrial production, house building and electricity output slow sharply, as they did in the year to April, the news weighs on global stockmarkets and commodity prices. When its central bank eases monetary policy, as it did this month, it creates almost as big a stir as a decision by America’s Federal Reserve. And when China’s prime minister, Wen Jiabao, stresses the need to maintain growth, as he did last weekend, his words carry more weight with the markets than similar homages to growth from Europe’s leaders. No previous industrial revolution has been so widely watched.

But rapid development can look messy close up, as our special report this week explains; and there is much that is going wrong with China’s economy. It is surprisingly inefficient, and it is not as fair as it should be. But outsiders’ principal concern—that its growth will collapse if it suffers a serious blow, such as the collapse of the euro—is not justified. For the moment, it is likely to prove more resilient than its detractors fear. Its difficulties, and they are considerable, will emerge later on.

(click here if cover is not observable)

This entry was posted in Black Swan Watch, BRICs, China and tagged , , , . Bookmark the permalink.

2 Responses to About that other 800 pound Macro Swan in the room…

  1. fromthefourthcorner says:

    Interesting stuff. Foreign Policy also have a good article on China at the moment: http://www.foreignpolicy.com/articles/2012/05/22/bear_in_a_china_shop – it raises some good points about the importance of efficiency – namely that mobilising resources is more important for developing economies than efficiency, as it leads to much more growth. Efficiency only becomes important when growth slows and resource use is close to optimal. I’m not an economist but it seemed like a valid point to me!

  2. Kuldip Singh says:

    The problem with China is that it was involved with capitalism only recently.We are aware of the powers of materialism to overpower an individual.
    If Western economies were overcome by greed,for China to avoid being subsumed by materialism is extremely difficult.All the more so, in the absence of a Spiritual Master.Certainly,Confucius,Lao Tzu and their contemporaries were extremely wise.However in today’s material world,people only pay lip service to their teachings.
    even the Vatican is having problems with it’s reputation in financial services.

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