From a guest post by redbedhead at Lenin’s Tomb:
By looking at some of the contradictions faced by the Chinese economy, it begins to look less unassailable than the media is prone to represent it. And it is less the case that China is obstinately refusing to revalue the renminbi than that China has grown itself into a corner, so to speak. With asset-prices rising and the risk of a housing bubble on one side, along with a major crisis of overproduction looming on the other, China must navigate between the rocks of multiple economic dangers and the charybdis of urban and rural revolt that could destabilize the carefully built edifice of Chinese capitalism. It’s not hyperbolic to say that the future of the world will be dramatically affected by whatever happens there.
This is an amazingly circumspect piece offering a world view of relationships between the U.S., Japan, China and the European Union. I contend that only through such an objective stance can we effectively understand what is actually happening and more importantly, what is likely to occur.
Once again we are presented with evidence that our myopic journalists serve us badly by aping conventional wisdom rather than truth.
A classmate of mine who works over there says the Chinese are blowing up a big bubble just like Greenspan did, likely with the same result. Won’t THAT be fun.
I can hardly wait. In the comments the author also indicates some of that $800B in dollar reserves may have been siphoned off by party functionaries in old fashioned graft and commodities speculation. It sounds like the new boss is pretty much same as the old boss.