By Matt for the TIB Network:
The conventional wisdom is that China will take over the economic world in short order, but Jim Pinkerton at
Newsday says, "Not so fast, Red."
A leading American hedge-fund manager, Peter Thiel of Clarium Capital Management in San Francisco, sees China's enormous expansion as "a bubble," created in part by interest rates so low that they have actually turned negative. That is, because of anomalies in the relationship between the Chinese yuan and the U.S. dollar, lenders are, in effect, paying borrowers to take their money. Needless to say, such money is not always well spent. And of course, such flukish financial circumstances won't last long.
Thiel doesn't dispute China's potential, based on the quantity and quality of its work force, but he is keeping his own money away from China - until after he can survey the damage caused by the bursting of the bubble, which he regards as inevitable. Thiel adds, "If you think China has a great future over the next 20 years, it won't hurt you to wait a year or two to see what happens after interest rates rise 500 basis points" - that is, five full percentage points.
Financial ups and downs are part of any capitalist system. But other concerns are unique to China. For example, this is officially a communist country. For every entrepreneur making a bid for world market share, there's also, seemingly, a state-owned enterprise making a plea for yet another bailout. Such government-run firms are inefficient and uncompetitive, but they and their employees are woven into the politics of this country.
And speaking of politics, what about freedom of the press? Of religion? These are questions that most Chinese prefer not to discuss. And for as long as they keep outproducing the world, they might not have to.
And that's really why I don't fear China in the long run...at least, not economically.
Islamofascism Delenda Est!
