China: The Bubble That Never Pops

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Oxford University Press, May 15, 2020 - Business & Economics - 240 pages
The Chinese economy appears destined for failure, the financial bubble forever in peril of popping, the real estate sector doomed to collapse, the factories fated for bankruptcy.

Banks drowning in bad loans. An urban landscape littered with ghost towns of empty property. Industrial zones stalked by zombie firms. Trade tariffs blocking the path to global markets.

And yet, against the odds and against expectations, growth continues, wealth rises, international influence expands. The coming collapse of China is always coming, never arriving.

Thomas Orlik, a veteran of more than a decade in Beijing, turns the spotlight on China's fragile fundamentals, and resources for resilience. Drawing on discussions with Communist cadres, shadow bankers, and migrant workers, Orlik pieces together a unique perspective on China's past, present, and possible futures.

From Deng Xiaoping's reform and opening to Donald Trump's trade war, Orlik traces the policy steps and missteps that have taken China to the brink of a "Lehman moment" credit crisis. Delving into the balance sheets for banks, corporates, and local governments, he plumbs the depths of financial risks. From Japan in 1989, to Korea in 1997, to the U.S. in 2007, he positions China in the context of a rolling series of global crisis.

Mapping possible scenarios, Orlik games out what will happens if the bubble that never pops finally does. The magnitude of the shock to China and the world would be tremendous. For those in the West nervously watching China's rise as a geopolitical challenger, the alternative could be even less palatable.
 

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Contents

1 A Tree Cannot Grow to the Sky
1
The Borrowers
9
The Lenders
29
4 Chinas First Two Cycles
50
5 Chinas Third Cycle and the Origins of the Great Financial Crisis
66
6 Chinas Economy in the Great Financial Crisis
81
7 Xi Jinping and the Start of Chinas Fourth Cycle
98
8 Deleveraging without SelfDetonating
118
9 Technology Transfer and Trade Tariffs
136
10 This Time Is Different?
155
11 WarGaming a China Crisis
176
12 Its Never Too Late
194
Further Reading
211
Index
215
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About the author (2020)


Thomas Orlik spent eleven years in China as Chief Asia Economist for Bloomberg and as a journalist for the Wall Street Journal. He is currently the Chief Economist for Bloomberg, based in Washington DC. He is the author of Understanding China's Economic Indicators.

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