China syndrome

Some people think China will grow strongly forevermore.  That would lead to significant changes in both the political and economic landscape going forward.

Others think China will run into a brick wall because governments are terrible capital allocators.  That, too, would lead to significant changes on the political and economic front.

In other words, China will have a large impact on the future of politics and economics no matter what.  You can’t think about the short, intermediate or long term without some attention to China.

With that in mind, I highly recommend a recent piece from GMO (a very good investment firm) regarding China.  

It points out the same problems highlighted in a book called Red Capitalism: that China’s growth is built on a shaky and corrupt financial system.  

I hold the opinion that China is headed for trouble, although I have no idea when that trouble will come about (just like I saw the dot-com bubble and the housing/credit bubble coming, but couldn’t predict when each would pop).  

China’s trouble could be long term stagnation like Japan experienced over the last 20 years, or economic collapse like Europe and the U.S. experienced in 2008-2009, or outright revolution.  I really don’t know.

But, I do know it’s important to think about ahead of time.

Nothing in this blog should be considered investment, financial, tax, or legal advice. The opinions, estimates and projections contained herein are subject to change without notice. Information throughout this blog has been obtained from sources believed to be accurate and reliable, but such accuracy cannot be guaranteed.

China syndrome