[AdmSmith]

Jeff, interesting article, but the economy will probably break before 2008. The bad debts are estimated at around 35-50 percent of the Chinese GDP. No country can survive that. Perhaps something will happen already at the end of 2006 as (according to Stratfor):

"But the dawning problem is that China is not in its own little world: It is now a World Trade Organization member, and nearly half of its GDP is locked up in international trade. Its WTO commitments dictate that by December, Beijing must allow any interested foreign companies to compete in the Chinese banking market without restriction. But without some fairly severe adjustments, this shift would swiftly suck the capital out of the Chinese banking system. After all, if you are a Chinese depositor, who would you put your money with -- a foreign bank offering 2 percent interest and a passbook that means something, or a local state bank that can (probably) be counted on to give your money back (without interest)?"

[Jeff Head]

Unless of course, some huge nationalistic issue comes along, veiled in propoganda, which distracts the people and gets them pointed at some external source.

[pganini]

I think you're missing something here.

China owns about $800 billion in US dollars, another $250-300 billion in US treasuries, so around $1 trillion.

GDP is a per year figure, and debt doesn't change much per year.

Chinese GDP for 2005 is 1.9 trillion US dollars.

Get it? They can pay it all back with US dollars, easily.

Compare that with what we have in the US:
http://www.cia.gov/cia/publications/factbook/geos/us.html

Look at PUBLIC debt: 65% of GDP!!!!! Are we going under? Not soon, but maybe in 10 years?? China's PUBLIC debt is 30% of GDP which they can pay easily with the dollars they own.

[GOP_1900AD]

The USSR survived it in the 1920s. Then what happened after that?