How China Fell Off the Miracle Path
China is now a threat to the United States not because it is strong but because it is fragile.
.. 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
.. If China were eating America’s lunch, its people would not be rushing to buy safe-haven apartments in New York or San Francisco. Far from conspiring to cheapen its currency, as Mr. Trump charges, Beijing is struggling to keep the weakening renminbi from falling more
.. Lehman Brothers filed for bankruptcy in the United States, tipping the global economy into recession. Demand collapsed across the world, crushing export growth in China. The leadership in Beijing panicked, apparently fearing that if the recession reached its shores, social unrest would follow.
.. Mr. Wen reversed course and doubled down on the old industrial model — fueling investment in factories with trillions in state lending and spending.
.. But this spree spread on conviction that Beijing, obsessed with hitting its growth target, would not let lenders or borrowers fail.
.. That 80-percentage-point increase is also more than three times the increase in the United States before its bubble collapsed in 2008.
.. It ordered people not to sell or even to speak critically of stocks.
.. The sputtering global economy is one shock away from slipping into recession. In the postwar period, every previous global recession started with a downturn in the United States, but the next one is likely to begin with a shock in China.