China's Economy: Smoke & Mirrors?

With the American economy in fragile recovery (we hope), the tendency is to believe that everyone else is doing better.

In fact, the country most Americans think of is the same one we fear most: China. I think it stems from the Beijing Olympics, where TV cameras panned across gleaming new buildings, an exploding economy and the sheer demographic facts that make it all but a foregone conclusion that the United States will be eclipsed as the world’s #1 superpower at some point in the future.

A billion or so people can tend to do that to our collective psyche.

Perhaps, however, there is more to the picture. After all, while capitalistic urges are emerging in China, the government is still very much involved—and, as can be the case here in America, too much government involvement can screw up a good thing.

Thanks to good friend Vicki Leben, who sent me the following video link. We often find ourselves on the phone completely solving the world’s problems on our own (why others don’t listen to our combined wisdom is a mystery to me). Anyway, I think Vicki was taken aback by this report, as was I.

Things in China may not be totally as they seem—check this out:




http://www.youtube.com/watch?v=rPILhiTJv7E

So, where does the truth lie? Can the Chinese government literally DICTATE growth where no demand exists, ignoring the laws of economics in the process? Will demand catch up with capacity at some point?

No one knows the answer, but one thing is for certain. What the Chinese government WANTS us to see is not the entire picture.

If you’d like my blog in your box (we’ll build capacity to meet demand), just let me know and I’ll add you to the list: tim.moore@citcomm.com