China’s economic destiny in doubt after leadership shock – Telegraph
We don’t know the the real state of official finances. The DRC said state enterprises have built up “large contingent liabilities” that have yet to be accounted for. It revealed two weeks ago that local government debt is out of control in a number of regions, with debt service costs exceeding 100pc of the total budget in 78 cities.
It said that 42pc of local debts come due by the end of 2012. Presumably they will be rescued by state banks in one way or another, but that merely perpetuates a broken model.
The World Bank and the DRC say there is nothing inevitable about China’s economic fate. Whether it succeeds or fails is entirely a political choice, and one that is being made before our eyes.
It has every chance of reclaiming its place it enjoyed in the early 1800s under the Qing Dynasty as a flourishing economic hub, before the onset of catastrophic decline, but only if it grasps the nettle now.
We will learn on November 15 as the Standing Committee takes in place on the dais — and from the exact order of entry — where the balance of power lies for the next ten years, the final ten years before China’s demographic crunch closes the window altogether. The omens have suddenly darkened.