China Crisis Fears Span the Full Range for Global Investors
One thing hasn’t changed since Donald Trump’s departure from the White House. China remains high on the agenda in the U.S., and in almost every sphere conflict seems inevitable. The top three China stories on the Bloomberg.com website at the time of writing were: Momentum Grows in Congress for Legislation Confronting China, ‘Diplomatic Boycott’ of Beijing Olympics Added to China Bill, and Australia Cancels China’s Belt and Road Deal With State. A similar snapshot at more or less any other time in the last few months would have yielded a similar picture.
Beyond fears that an assertive China will go to war, either commercially or even militarily, there is a set of almost equally alarming questions that concern the country going in the opposite direction: Will it stop growing and deprive the rest of the world of its desperately needed buyer of last resort, or could China even succumb to a Lehman-level credit crisis that sends the world into turmoil?
None of these questions can be lightly dismissed, although they owe as much to sentiment in the West as to China’s actions. A decade or so ago, it was taken as read that China was really a capitalist economy, communist in name only, steadily easing its way toward full membership of the club of liberal democracies; now it has become popular to refer to the entire country as the CCP, for Chinese Communist Party. There is real and disquieting change afoot in China, but that is balanced by a shift from undue complacency to exaggerated alarm in the U.S. and western Europe. And the contradictions at the heart of the Chinese model remain as contentious, and as baffling for outsiders, as ever.
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