You can't just take the GDP growth on its own and say: "this number is fairly high compared to other countries". Yes it is, but china needs to maintain a ridiculous growth rate to pay for the costs and upkeep of its economic machinery. The GDP figure is propped up by vast amounts of investments that are financed by debt taken out on the basis that future growth will pay for it. Do you see the problem? Does it remind you of anything? Yes, it is exactly what the West is/has been doing.

China is doing the western policy of growth fuelled by debt. Betting on China is tantamount to betting on unfettered money printing shrouded in a veil of corruption and secrecy. Debt financed by production that is consumed by the west. A bet on China is a bet on the US. Let's not forget the massive exposure to western debt and assets. It's as simple as that.

To make things a touch more spicy, China also has an opaque shadow banking system that was tiptoeing around a meltdown just last year.

China is not doing anything clever, they are just really adept at kicking the can down the road.

The future of China is only as bright as the future of US is I'm afraid. To think that China can somehow survive if the western countries collapse or dwindle away is folly. There are no independent players. A deleveraging that is big enough to dismantle Europe or the US will most likely cause a global collapse. It's impossible to predict what will happen if that hits China. How strong is the central government? To what end are they willing to go to preserve their hold on power? Tianamnen Square 2020?

The "invest in China for ridiculous returns" ship has sailed long ago. If anything, I'd be looking at taking profit and hedging all remaining exposure to China with urgency.

> "You can say what you want about too much debt, overpriced real estate, manufacturing, etc..., but they'll figure that out."

If this logic were applied to an investment decision it would be considered foolish regardless of the eventual result. You don't go looking for facts to support your economic thesis; those are easy to find. You look for the objections to that thesis and think very critically about them, trying to figure out how (not just if) the strengths of the country or company can compensate for those weaknesses. Blithely dismissing some of the most significant objections to your thesis is the most damning signal of not having thought it through.

The future of... conspicuously consuming luxury goods? Thanks but I'll pass. It's also not totally clear how sustainable the whole thought police thing is in the long-term. The larger and more educated is the middle class, the more of a problem it will become for them.

Conspicuous consumption is an interesting concept, but it's over used.

Rolexes don't mean anything if everyone can afford one. The consumption of the middle classes has elements of all sorts non rational behavior, but dismissing people's economic motivations this way is disrespectful, especially people you don't know.

Personally I see ambition, especially ambitious for the next generation as a healthy disposition. What it will be applied to will vary and change, but the ambition itself can build momentum.

Why would the thought police situation cause economic collapse? If there's enough pressure, things will change. China already has changed politically quite a bit over the last 50 years.

>law of big numbers ...Lenovo is #1 in computer sales ...China owns the solar business

I think the big numbers thing is slowing things already. Going from 10% to 20% of the solar market is fine, 80% to 160% can't happen.

I agree China will do well. If you look at how Chinese people do anywhere outside China (Singapore, London etc) they all get degrees, drive nice cars and so on. Mainland China was reduced economically to close to zero by Mao's communism and is now catching up to how the Chinese are anywhere else.

The fundamental problem with China's growth since 2009, is that it has all come courtesy of truly massive amounts of debt.

To generate annualized 7% GDP growth requires five +/- times as much debt as they get in new GDP.

I don't see how an economic model built on growth via accumulating debt faster than any other country in world history has, is a sustainable model. They're courting disaster, and decades of stagnation, just like Japan did.

Debt to whom, though? Remember that all debt is someone else's asset. This is where the wealth of China's rich individuals is going: back into the system as loans, bonds and investment to keep the machine going.

Agree 100% but there are always idealists who thinks China is some miracle country pushing ahead of anyone else. China is basically your neighbor who just bought a second Porsche by taking out an even higher mortgage after his home price was marked higher by the bank. You can call that success. I call it unsustainable debt.

Agreed: yet another China bashing article. What these innumerable western China observers touting economic jargon in their articles miss is the fact that China is self-sufficient in most meaningful ways.

Yes, they do import luxury goods, no, a shortage won't cause national issues. Yes, they have an energy challenge, no, that's not ignored ... in fact it's reasonably easy to argue that China is further on top of world energy challenges than any other nation.

What's it really like here? Most people live where they were born, or in the nearest large city. They might go to study in a larger city when young. They make ends meet, have a roof over their head, have cell phones, electric scooters or motorbikes (in the countryside), and the affluent and middle classes have cars and can travel.

As a foreigner, it's surprisingly comfortable once you get over the visa hump. A few days ago I came back from a major city with bottles of wine and cheese, about the only hat-tip to imported stuff except perhaps Steam games and the occasional Amazon book in my lifestyle.

Yesterday I rode my electric scooter to the morning market and ate a sort of bean soup with fresh coriander, chilli and garlic and lovely spring onion breads. I think a breakfast for two came to about $1. Then my wife and I went shopping for fresh vegetables for the family, in a massive market featuring produce picked the same day piled in much greater variety than any western supermarket. We spent perhaps $8 which is enough for perhaps 10 people for a day, otherwise for multiple days.

I worked during the day via VPN, then in the evening sat in front of the widescreen TV to enjoy some flat-rate video on demand from the extensive - despite our semi-rural location - international selection available through the local cable company. Afterwards, we got on Taobao and ordered a couple of wetsuits, some gloves and sailing shoes. Equally, we could have ordered arbitrary quantities of almost any chemical or object you can imagine.

This morning I woke up to a lovely salad with ample cashews and blue cheese, checked in to my email, then rode the electric scooter to go sail a catamaran on our local 210 square kilometre alpine lake for three hours. The weather was perfect, and it's practically November here in the northern hemisphere at an altitude of 2000m (6500ft). I'm getting ready to participate in the first national sailing competition to be held here next month.

After sailing, my wife, aunt and I sat down to a lovely meal in a restaurant featuring a sizzling beef hotplate, a plate of shitake mushrooms and greens, and a tofu and tomato dish with spring onions. Meanwhile, my mother in law looked after our child for free - no need for paid childcare here! Total cost of the meal? Perhaps $8. We discussed some plans to help our aunt open a new restaurant, since her last business partner was rather a nasty character. Decades ago, she was a star English student... perhaps she will open something western?

There are almost zero homeless people here, people have a family support network to fall back on, and tangible freedoms are in many instances more numerous than in much of the west. Yes, there are limitations in every society - it's just a matter of knowing where they area. Legal weed? It grows here wild, naturally, and you can buy sacks full of seeds in the market. Mushrooms? We're the world capital. Paragliding, sailing, off-road mountain biking, climbing, etc... it's all here.

Oh, poor China - how I loathe thee! 13 years and counting ;) Of course, I wouldn't want to live in the east coast cities...

Thank you for your insight into how easy it is to be a rich foreigner in a country where per capita income is roughly 10% of what it is in the US.

China has very very real issues that they haven't addressed in the slightest. They're building tons of real estate that has almost no chance of ever being useful to bump GDP, they're facing domestic unrest in Hong Kong, and they're transitioning into being a more open democratic society. Nobody knows how this is going to work.

Firstly, 10% per capita means 20% per capita because nobody pays tax. Secondly, nobody knows the real numbers because it's largely a cash economy. US real estate is largely empty too. People here don't need cars to live, and overheads on everything are far lower, so 20% per capita is actually a much nicer life than in the US. Say you have $20 per day, you can live really fine here. People are supported in retirement by their families, who they continue to live with, so there's no need to save as much beyond your children's education. Hong Kong 'unrest' is irrelevant to mainland China, except to show that the government has already vastly improved its capacity to respond to such situations. Everyone here knows exactly 'how its going to work': the Communist Party will stay in power.

I think you're missing the point of the article. Your "my life as a rich foreigner in China" comment doesn't really address of the concerns Larry Summer had about China's future, and in fact it doesn't even seem to be particularly negative about the country (it's mostly drawing comparisons to other nations who rapidly developed in recent history), so I think you're being a bit defensive.

China's biggest problem, besides the mountains of debt, the record inequality, the broken farming (in which ~600 million people are being kept busy with intentionally inefficient farming practices so they have something to do), the lack of individual freedom, the lack of property rights for farmers, the pollution, and the heated conflicts with most of their neighbors - is probably water. 20% of the world's population, 5% to 6% of the world's fresh water, and falling:

http://qz.com/166235/chinas-water-shortage-is-so-bad-it-coul...

Speaking of inequality, what about the gender ratio caused by the One Child policy? How stable can a country be when 10s of millions of men have no hope of getting married?

{{citation-needed}}

Which city are you in? The sailing and food sound great

Fuxian Lake, Yuxi, Yunnan