China faces critical challenges
Earlier in the year, we foresaw the risks building rapidly in China: imbalances in capex and growth, huge debt accumulation and falling competiveness due to the political imperative for continued wage growth. Now, China faces five critical challenges:
- economic slowdown
- lack of competitiveness as wages continue to rise
- an overvalued currency
- debt at 300% of GNP (with borrowers who can’t pay the interest), and
- a stock market bust.
The global implications may be profound. Read more