The Boom Goes Bust
James S. Chanos
One can imagine Marco Polo, back in the thirteenth century, uttering the prescient phrase, “China is the future.” In the twenty-first century, it has become the nearly universal mantra repeated by savvy investors and the general public, uttered with increasing frequency and conviction. Certainly in the first decade of this century, had you asked just about anyone in the United States or western Europe, especially if they were sitting around a conference table at a forum on global economics, where to put your money for future growth, that is what they would have answered: China. China was seen as the world’s new economic power, replacing the West. It was where the new wealth would be made.
To some, this made China the world’s savior, since China was the fastest growing economy on earth by galloping leaps and bounds and, as of this writing, remains the second largest economy on the planet. It seemed well positioned to do the heavy lifting that would eventually haul the rest of the world up and out of global recession. If the once-dominant economic powers of the West were to decline a bit in the rankings as a result, that was okay by them. Everyone has a price, and increasing prosperity is never a bad price to pay.
To others, the China phenomenon seemed scary. They viewed China’s growth as the key competitive threat to Western hegemony, and particularly to U.S. hegemony, not just economically but in every other sphere—political, cultural, ...