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yesthattom

Is China the Next Enron?

Given zero data but a big "hunch", 6 months ago I thought, "Gosh, what if China is the next Enron? Excessive growth and no real potential that finally collapses." Maybe it was wishful thinking.

Now Thomas Friedman has started saying that it can't possibly be true in the New York Times.

Sadly, Friedman is what I call a brilliant idiot. He's brilliant in some ways, and idiot in others. Brilliant about predicting outsourcing to Asia, an idiot when he talks about the war in Iraq.

So, this whole "China the next Enron" thing.... is it gaining traction? Enough traction that he has to defend it?

Who else is saying this about China?

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When Thomas Friedman says something can't possibly be true I start to prepare for it to happen.

I'm just saying.

I've been seeing various articles about how China's explosive growth might not be sustainable in even the short run, yes. (And agreed with wayward_va above.)

Edited at 2010-01-16 06:05 pm (UTC)

If China collapses, do we still owe them all that money?

China's growth so far is at least mostly real, rather than mostly based largely on fraud, so in that sense they are not the next Enron. What's more, they have lots of still-agrarian population and exploitable (albeit non-renewable) resources, so if your time-frame is multiple decades, their growth will continue. Shorter term, I don't have much to add one way or the other.

i really enjoy it when you say the logical thing

The Economist has been explicitly looking into that possibility.
At the moment, they disagree with you, that so much of the growth that China has had over the last decade is corroborated by other data sources that we should treat their current ostensible position as largely true.

This doesn't mean that they're necessarily going to continue to grow at the same rate.
Just that the growth they've had in the last several decades is not entirely fraudulent.

Getting down to brass tacks, China's economy does not really matter to china.


What matters is, do they have food.


This is China. They didn't hesitate much too roll tanks into Tienanmen square. The home of the cultural revolution that killed millions of citizens. The state is so strong it can enforce a the one child policy.

America dithers over abortion, China steps up to the plane and speaks clearly. (yes the one child policy only applies to the Han, and only int the cities... so far they have stopped 300M births, or about as many people as in the US. )


At the end of the day china can close the ports, empty the cities, return the people to the land and have a functioning state.


When Enron collapsed one person went to jail, maybe two. Billions of dollars in wealth transfer and almost no one has been punished. Arguably just enough punishment has been handed out so that people can't say "no punishment was handed out".


When something goes that badly in china people get punished. People get dead. They executed the head of the SFDA (State Food and Drug Administration) in 2007.


Will the yuan become worthless? Maybe. Will china fold up like Enron and be gone without a trace in 2 years? No.


At best a controlled demolition would close china up and seal off the borders from the world. At worst, regional nuclear conflict and world financial collapse.


Seeing as 80% of computers have parts that come from Taiwan... we should pay attention a little bit.




"so far they have stopped 300M births"

i wonder how folks can tell?

stopped births = abortions?

stopped births = sterilizations?

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