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New York Times, December 4, 2012, 12:29 pm
From Bubble to Muddling Through?

...China's economy may have bottomed. Much of the improvement appears to have come from larger, state-owned enterprises instead of private firms. Inventories of finished goods rose slightly and there was weakness in manufacturing employment. Then again, considering that China’s official measure of urban employment has remained nearly unchanged since the start of 2010, who knows what to believe in the official statistics....

...THE SHANGHAI INDEX HIT A 46-MONTH LOW ON MONDAY. (It rose slightly on Tuesday.) The index is down more than 10 percent for the year and looks to be heading for its third consecutive annual loss. ...

...China’s shadow banking system may now be as high as 50 percent of China’s gross domestic product. The yields on the wealth management products that make up a large part of the shadow banking system are significantly higher than saving deposit rates, and these days buying one looks a lot more attractive than putting your money into the stock market....
[end quote]

The Shanghai stock chart isn't a pretty picture.$HSI,$ST...

China's progress as a mercantilist economy over the past 20 years has put many of its actions in the range of the U.S. in the 1920s. Although their leaders may be very smart people and very sharp observers of western economies, that's not the same as having suffered their own crash and depression.

This article is titled "From Bubble to Muddling Through?" but experience shows that a country that has a shadow banking system that is 50 percent of its gross domestic product, especially if its system is notoriously corrupt and its published data is notoriously imaginary, may be lucky to muddle through.

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