Gloating China, Hidden Problems

Article excerpt

Byline: Niall Ferguson

Beijing has chastised the U.S. for fiscal recklessness, but it may be headed for an economic collapse of its own.

Small wonder the Chinese news agency was on gloat mode during the week of Aug. 8. The U.S. stock market fell off a cliff, bounced briefly, and then fell again. The Federal Reserve admitted the economy is close to stalling. And in China? Oh, just the usual. Exports surging to record heights, that sort of thing.

At first sight, recent events have exemplified the great shift from West to East that is the biggest story of our time. Even before the odds of a "double-dip recession" shot upward, the International Monetary Fund was forecasting that China's gross domestic product would overtake that of the United States by 2016. And as everyone knows, China is now America's biggest foreign creditor.

And yet, in several weeks of traveling through China, I've found myself wondering if Beijing is tempting fate by so openly relishing America's current misfortunes. Apart from a few days in Beijing, I've eschewed the favorite destinations of Western visitors. I've been to Yanan, where Mao established his grip on the Communist Party in the 1930s, and where people in outlying villages still literally live in caves. I've been to Xian, to see the burial place of Qin Shi Huang, the first emperor, who hammered China into a single Middle Kingdom more than two millennia ago.

I've sweltered in Chongqing, the exponentially growing ega-city far up the Yangtze. I've choked on the dust of Changsha in Hunan province. And I've stifled in the muggy air of Hefei in Anhui.

I spent a night at the Pig's Inn in Bishan, a sleepy village in southern Anhui, where time appears to have stood still for 100 years. Bishan is the exception. Everywhere else, the Chinese seem intent on cramming a century's worth of industrialization and urbanization into about 30 years.

The bald statistics are startling. While the West stalls (and Japan slumps), China's current growth rate is just under 8 percent. …