Is China a paper tiger?

An email from the optimistic Ray Kraft [] below. Mao used to call America a paper tiger, meaning that it looked strong but was not

Even the Chicom government has calculated and published its estimate that circa 2015 the number of workers in China will enter a period of permanent decline in both absolute and proportionate numbers, while the number of retireds in China will enter an indefinite period of increase in both absolute and proportionate numbers. I.e., the Graying of China begins, in about five years.

At that point, the long-term economic decline of China begins, and because of 30 years of its one-child policy - it would take generations of 2+ children per family to reverse the trends - this in a society in which one-child per family is now the social / cultural norm, and which faces an imminent and indefinite era of economic decline.

My expectation is that within a few years after the decline begins - circa 2020-2030 - the Chinese empire will begin to unravel, if it hasn't begun before then. It was cobbled together after WWII from a vast array of provinces and cultures, and is as fragile as the old Soviet Union was, and could disappear as quickly. It is held together now by prosperity and force, but as prosperity declines, force will become inadequate to keep it together.

If America avoids suicide, America will emerge within a generation as an even more dominant geopolitical and economic power as:

1. China slowly self destructs.

2. Russia, with a population declining by 1/2% per year, also slowly unravels.

3. The EU, cobbled together from a couple of dozen different economies artificually slaved to a single currency, drifts more or less aimlessly in the Sargasso Sea of political incoherence.

4. The Middle East has peaked, and if America has sense enough to move toward energy independence with nuclear and other sources (note that Obama has proposed $56 billion in new loan guarantees for nuclear power plants in his new budget), the decline of Islamic Middle East will be as inexorable as that of China and Russia.

If America manages at least to Muddle Through, at best to Flourish and Prosper, America's destiny will be to become the next "Roman Empire." It's our's to lose. The biggest threat is that America will not understand and grasp this destiny, and will fail to understand and accept the responsibility ("noblesse oblige") that goes with it. i.e., the destiny and fate of Civilization now lies in America's hands, even if we don't know it. And we need to look to the Athenian Democracy and the Roman Empire for lessons learned.

Ray Kraft was responding to a Jack Wheeler article of 5th. which also said that China was in a weak position. Excerpt:

The myth that the Chicoms magically turned their economy around on an instant dime - one minute double-digit GDP growth via the US gorging on their exports, the next minute the exports fall off a cliff as we stop buying yet they still have double-digit GDP growth via a hocus-pocus stimulation of their domestic economy - is a myth few big-time investors believe in now.

And finally, folks are figuring out that of all China's bubbles - make-believe growth, stocks, real estate - the biggest of all is its gigantic pile of "dead money" - those $2.4 trillion of our alleged dollars.

How many countless times have you heard some pundit bemoan how much we "owe" China? Yep, sure was stupid of us. We got all this stuff - as in real physical products we actually use in our lives - and they got all this paper, all these imaginary things called "T-bills" and such, and please explain how they cash them in.

Finally, bankers are figuring it out. "There's nowhere for China's reserves to go," is the latest buzz in London's City. "How do they unload them without taking a trillion dollar haircut?" And with the whiff, the merest whiff of the US defaulting on its debt, the Chicoms are running scared and retrenching. Their attempted stimulus of their economy has run out of steam - any more would be like pushing on a string.

So they've pulled back on buying up the world's commodities, which is why everything from copper to oil to soybeans is down - which is why, e.g., Brazil's Bovespa index is down thousands of points as China isn't buying its beans and iron ore.


Posted by John Ray (M.A.; Ph.D.). For a daily critique of Leftist activities, see DISSECTING LEFTISM. To keep up with attacks on free speech see TONGUE-TIED. Also, don't forget your daily roundup of pro-environment but anti-Greenie news and commentary at GREENIE WATCH . Email me here

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