China Falls Off Economic Wealth As It Runs Into Debt

For years now, the U.S presidential candidate Donald J. Trump has been sounding the alarm on China, calling it an economic bully that has been “eating our lunch.” The crux of Mr. Trump’s attack is that Beijing manipulates its currency to keep it cheap and give Chinese exports an unfair advantage. But according to New York Times, that narrative is so last decade. 

China is now a threat to the United States not because it is strong but because it is fragile.

However Report shows how Four key forces has been shaping the rise and fall of nations since the 2008 financial crisis, and none of these forces bode well for China. As its Debts level has risen dangerously fast.

Trade growth has collapsed everywhere in the world, a sharp blow to leading exporters, again led by China. Many countries are reverting to autocratic rule in an effort to fight the global slowdown, none more self-destructively than China.

And, for reasons unrelated to the 2008 collapse, growth in the world’s working-age population is slowing, and turned negative last year in China, depleting the work force.

It will be difficult for any country to grow as rapidly as 6%, well all but impossible for China. Nevertheless, in an effort to exceed that target, report shows that Beijing is pumping these debt into wasteful projects(such as moving a record $675 billion out of the country in 2015, and some of it went for purchase of foreign real estate), and by this digging itself into a hole.

 The economy is now slowing and will decelerate further when the country is forced to reduce its debt burden, as inevitably it will be. The next step could be a deeper slowdown or even a financial crisis, which will have global repercussions because seven years of heavy stimulus have turned the world’s second largest economy into a bloated giant.

Wen Jiabao, former prime minister, had earlier gave warnings that after three decades of heavy industrialization, China would be “unstable” and “unbalanced,” as too many factories are belching too much smog.

Many prominent Chinese recognized that with per capital income rising above 8,000 U.S Dollars, their nation would face a natural slowdown, as Japan and South Korea had when they reached a similar middle-income level.

Well to me by virtue of this fact i think China will fail because it lacks the democratic ingredient. It is easy to see why it will fail but when and how is the open question.