There is certainly that possibility. One of the reasons China refuses to float the yuan is that they know this will result in a recession. They have a corrupt banking system. So they are working to fix that furiously, but it's hard to do when the whole culture is one based on favors and bribes. We've been relatively successful in stamping down corruption, so that it allows a decently frictionless economy in the US. But even here, corruption is rampant, most recently at the highest levels of gov't (Wolfowitz, Cheney, Rove). Those are things China has to deal with.
I do think they are trying to reign things in, but I don't envy their job. It's very difficult to manage a free market economy with a centralize, communist oligarchy ruling the government. They need a democratic government with a distributed governmental architecture that is still held accountable at every level, such as that in the US. That is how you control that type of massive economic growth. China hasn't figure that out yet. They think their style of government can work side by side with a free economy. I think the world will find out over the next couple of decades that it can't and won't work.
FYI. Chavez will find this out too. He talks about socialism, which is wealth redistribution, and yet, he is consolidating power to himself. Wealth redistribution has to go hand in hand with power distribution. If power is concentrated at the top, then so too will the wealth be, and corruption and cronyism will ensue. Those are facts of life as reliable as the sun coming up every day.
I think the ancient Chinese curse applies here: "May you live in interesting times." |
