China economyThe always lively AsiaPundit Blog just weighed in on the China boom or bust controversy we started the other day, here and here.  In a post, entitled, “China’s Boom/China’s Bust,” [link no longer exists] AsiaPundit comes down on the side of the bears, but just barely (pun intended):

AsiaPundit admits to being a bit of a bear on China. It’s not that China’s economic growth is a myth. The ‘miracle’ is very measurable. However, anything that can be measured cannot be called a miracle.

There will be a crisis, it could be sparked by bad policies at home or abroad. A collapse of US housing markets, for instance, could easily plunge the Middle Kingdom into despair. When the crisis happens, the interesting thing will be how it plays out socially and politically.

The US tends to solve its problems quickly and has the political flexibility to dismiss bad administrations by ballot. Japan’s biggest crisis sparked a decade of deflation. After the Asian crisis Indonesia emerged a democracy, the Philippines never really found its feet, while South Korea made a wonderful transformation.

Predicting when a crisis will occur is a crap shoot, although there are indicators that can provide warning signs. Guessing what happens after a crisis hits is next to impossible.

China Law Blog earlier this week posted a response challenging Minxin Pei’s doom-and-gloom article on China’s problems. Today Dan Harris, the blog’s author, notes that Tom Barnett and James Na have replied:

I blogged a few days ago about a recent article by Minxin Pei predicting China’s inevitable fall. At that time I talked about the article having generated “quite a bit of buzz in the blogosphere.” The buzz is even louder now.

I posted Dr. Pei’s article because I found it thought provoking, but I did not sign on to its pessimistic conclusion. I suggested that those interested in these sorts of “big idea think pieces” on China should read “big idea” bloggers like James Na, Dan Drezner and Tom Barnett, whose views range all over the China optimist-pessimist map.

Barnett and Na took me up on my suggestion and ran posts on the Pei piece. Na liked Pei’s thesis. Barnett did not.

At some point, China will face both small and large economic crisis. My disagreement is with those who seem to delight in predicting China’s economic doom based more on China’s politics than on its present economic realities.

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Dan Harris

I am a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

I mostly represent companies doing business in emerging market countries. It has taken me many years to build my network and it takes constant communication and travel to maintain it. My work has been as varied as securing the release of two improperly held helicopters in Papua New Guinea, setting up a legal framework to move slag from Canada to Poland’s interior, overseeing hundreds of litigation and arbitration matters in Korea, helping someone avoid terrorism charges in Japan, and seizing fish product in China to collect on a debt.

I was named as one of only three Washington State Amazing Lawyers in International Law, I am AV rated by Martindale-Hubbell Law Directory (its highest rating), I am rated 10.0 by AVVO.com (its highest rating), and I am a SuperLawyer.

I am a frequent writer and public speaker on doing business in Asia and I constantly travel between the United States and Asia. I most commonly speak on China law issues and I am the lead writer of the award winning China Law Blog (www.chinalawblog.com). Forbes Magazine, Fortune Magazine, the Wall Street Journal, Investors Business Daily, Business Week, The National Law Journal, The Washington Post, The ABA Journal, The Economist, Newsweek, NPR, The New York Times and Inside Counsel have all interviewed me regarding various aspects of my international law practice.

I am licensed in Washington, Illinois, and Alaska.

In tandem with the international law team at my firm, I focus on setting up/registering companies overseas (via WFOEs, Rep Offices or Joint Ventures), drafting international contracts (NDAs, OEM Agreements, licensing, distribution, etc.), protecting IP (trademarks, trade secrets, copyrights and patents), and overseeing M&A transactions.

  • Thanks for the link. I’m not entirely on the same page – politics will play a role in any crisis that hits here. But it won’t particularly be because authoritarian governments can’t be efficient (Lee Kwan-yew is the posterboy for effecient authoratianism, and Pinochet was also an efficient administrator). But politics matters. The party is not united on things and that means it does not address problems with the urgency needed. That would apply to rural/central divisions and turf battles between the PBoC, Mofcom, NDRC, etc…
    An economic crisis will happen and there are a lot of dominoes that could topple if the catalyst is big enough. No one predicted 97, though Krugman and Mark Clifford did make good calls.
    But an economic collapse doesn’t mean the party will fall. There is no opposition, so I expect it will hang on. What worries me is that a post-crisis China will see a new Mao rather than a new Deng. I still hope for a new Zhao Ziyang.
    But enough about politics. I really can’t believe that my boss thinks that Wen Jiabao’s annual press conference is of more news value than Tiara Lestari’s exhibit.