“Eye-popping.” That’s how David Dollar of the Brookings Institution described a recent Conference Board report predicting the Chinese economy would grow at only 3.9 percent between 2020 and 2025. Also stunning is the forecast of former Treasury Secretary Larry Summers. Summers and co-author Lant Pritchett, both at Harvard, coincidentally believe China will experience 3.9 percent annual growth over the next two decades.
China’s official National Bureau of Statistics estimates that the country’s economy expanded 7.7 percent last year. It’s hardly surprising, therefore, that Nicholas Lardy of the Peterson Institute described 3.9 percent growth, in the words of the Wall Street Journal, as “too gloomy.”
Despite what virtually everyone thinks, the 3.9 percent figures are wildly optimistic. China, at the moment, is in fact growing in the low single digits, if it’s growing at all, and it is heading into one of the biggest debt crises in history, if not the biggest. The shock of a Chinese collapse will roil the global economy. “China Is Very, Very, Very, Very Big,” Bloomberg noted last week, so when it falls the consequences will be very, very, very, very catastrophic.
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