China's Economic Problems Mount

Prognosticators on China's economy generally fall into two camps. One asserts that reform is still the order of the day, will be reinforced by Xi Jinping and the news leadership and growth continue at the 7-8 percent level which the party expects. The other sees China headed for crisis as export growth slows to a crawl, debt of state enterprises and, more especially, the debts of the entities set up by provincial and local governments and invested in unviable ventures cause a crisis in the banking system similar to that which ravaged the economies of Southeast Asia in the late 1990s and the US and Europe in the wake of 2008.

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