Most economists assume that the current bad economic times will turn around for the better, driven by the economic engine of all those thriving emerging nations like Brazil, China, India, and parts of Africa. But what if China ends up having the same kind of overheated economy that the West has had, and goes into a tailspin? Well, that would be bad.
The Atlantic magazine’s Max Fisher writes that China’s leaders never anticipated that the West – their biggest customer – would suddenly have difficulty buying its cheap goods. And now, China will have to adjust its economic model quickly in order to keep that officially-ordained 8 percent growth rate going, and to prevent unrest.
"Though China's leaders have long planned to change the country's economic model – which is also at the heart of its political model – these crises mean that China must accelerate its plan to restructure its economy. Right now, China's economy is based on exporting to wealthy, developed countries. For that export-driven system to work, China's economy needs to remain weaker than those of its buyers. One of the biggest reasons that China sells so much stuff is because it can produce that stuff cheaply. But as China's growth accelerates and European and American growth slows due to financial crises, China is catching up with the developed economies faster than anyone had anticipated. If and when China gets too wealthy to continue exporting cheap products – or if the developed economies become too weak to keep buying them – it will be in big trouble."
Economic discontent is all the rage these days, and Egypt’s streets are once more taken over by stone-throwing youths, demanding that the Egyptian military loosen its grip on political power. Here in the US, the Occupy Wall Street movement is shifting from financial districts to college campuses, and some Occupy Wall Street organizers see the rougher tactics of the New York City policy department in clearing out camping activists from Zuccotti Park as a possible boon for the movement’s next big thing.