Is Torrid China Growth Endangered by an Onrushing Giant Exploding Bubble?

April 25th, 2013 | by Morris Beschloss | Comments

While China’s inexplicable industrial miracle has transcended all previous expansions of the 300 year old industrial revolution, there are flaws in that world giant’s armor that may signal early signs of increasing trouble ahead. With a 1.4 billion population (out of a world count of 7 billion), this 5,000 year old civilization has, in 30 years, transformed from a failed, undeveloped global despair to the hope of the planet’s future growth.

Under the guided wisdom of a once rejected dissident leader, Deng Xiaoping, China exploded on the world economic growth scene in the mid-1980′s, replete with famine, epidemics, earthquakes, and growing internal strife. As if led out of this hopeless wilderness by the hand of a modern-day Moses, Beijing (then Peking), embraced the best of capitalism to the point where its hundreds of new major cities have already encompassed more than one-third of its previously desolated population pool, barely eking out a daily living.

Today it stands as a pillar of industrial, technological, and export strength, around which most of the modern world revolves. With a growth factor that has approached double digit annual expansion since the 1990′s, it has also become the manufacturing base for all the transplanted world factories combined, every where else. Most knowledgeable observers expect this super-developed economic behemoth to surpass America’s world leadership top position within 20 years or less.

With over $8.3 trillion annual gross domestic product against the U.S.’s near $16 trillion, a continued anticipated growth factor of 7.5% versus America’s 2.5%, could make this great leap forward come ever sooner. But major concerns are mounting, despite China’s $4 trillion in surplus, versus the U.S. Treasury’s$16.8 trillion debt:

1) China’s aging population, complicated by both a one child per family rule, lately notorious by its exceptions, has turned its greatest ever percentage of elders (above 65 years of age) into a massive liability; as an increasingly smaller percentage of workers are available to generate the revenues for export, as well as internal development.

2) A climatic disaster may be in the making, as the nation, with the same physical acreage as the U.S., has totally neglected its eco system, while bulling ahead on the business expansion front.
3) With a shortage of raw materials (oil, natural gas, coal, rare metals, rice, soybeans and cotton) in ever greater short supply, China is increasingly depending on purchasing or contracting sources from around the world. These are vulnerable to pricing and militant turbulence.
4) The super giant’s birthrate anticipates a demographic crisis by not providing available replenishment of its workforce.
5) The quintupling of hourly wages in the past decade may have bought civil peace at home, but has curtailed its competition with developing industries abroad. This will surely affect Beijing’s exports totals in the months and years to come.

6) With most of its population relegated to its eastern coastal areas, wile neglecting central China and the Moslem and Tibetan areas of the West, China may be facing increasing unrest from restive minorities, agitated by strident messages from foreign co-religionists through modern computerized communications systems.

If a combination of these potential indeterminates converge into a cascading flood tide, it may foster what history may someday call the “Miracle of Modernization” running into a wall of insurmountable problems, uniting to bring this modern Shangri-la to a premature peak.

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