Is the Tiger Sick ?

Charles Hugh Smith:

I know it's tough to think about anything but the fast-melting ice cream cone that is Europe, but there are some things you should know about China. All the reassurances you've been reading about China's "soft landing" and its "they know what they're doing" central government are probably false. Here's why: very little in China is as it seems on the surface, or as it's presented to the Big Noses (Westerners). There are three reasons for this.

Pei:

For quite some time, analysts of China have been puzzled by a strange phenomenon: the country’s public and financial institutions are decidedly subpar by any international standard, but its economic growth rate is anything but. This puzzle can only be explained by two conclusions: either China has been fudging its growth data, or Chinese institutions aren’t as bad as outsiders commonly think.

Pettis:

I’m often referred to as a ‘China Bear’ and that’s a word I really hate. I’m not a China bear—I'm a skeptic. And, in some of the incredibly feverish statements we’ve heard in the press and among my former investment banking brethren about the prospects in China, as well as in some of the things we hear about the imminent collapse of China, I have to say that I find much of that to be very very questionable and frankly nonsense. There are some very very big problems that China faces and a lot of the long-term expectations that many of us have for China, whether it is that China will be the largest economy in the world in 5 years—I’ll take that bet, it won’t—or whether it’ll collapse in five years—I’ll also take that bet, it won’t. I think the truth is a little bit more boring—it’s somewhere in the middle.