Writing for Project Syndicate, Jeffrey D. Sachs argues China is in danger of heading into the same slough of despond the Japanese economy has inhabited for the past couple of decades. More interesting is that Sachs blames U.S. pressure for both the Japanese dilemma and the current downward direction of China.
Sachs is of the opinion U.S. threats to limit imports from Japan caused their problems, not a burst real estate bubble and a population who won't have children. He believes we are hassling the Chinese with the same threat, causing them to overvalue their currency and thus hurt their economy.
Odd he doesn't mention the bursting Chinese real estate bubble and the lingering effects of the one child policy. I believe Sachs seriously overrates the willingness and/or ability of the U.S. to carry out such threats, if they are even being made. Does anyone in the outside world take Obama at his word in such matters? If so, why?
Regular COTTonLINE readers will remember we wrote some months ago about China following Japan down the crony capitalism path to perdition. Hat tip to RealClearWorld for the link.
