OK, so it’s only 135. Nonetheless it gives us pause when the former labor secretary and economic soothsayer tweets that China’s “bubble will pop.” If that happens, you can stop worrying about Greece and the other comparatively tiny economies of Europe.
China is of course the second biggest economy in the world, behind the United States. Beijing is a major purchaser of U.S. debt and the country supplies America’s cash-strapped consumers with cheap goods and not-so-cheap iPads. If China took a dive, it would further imperil the world economy. But there’s taking a dive and there’s bubbles bursting.
The country is aware of the danger, and Beijing announced a scheme Monday to lure investment into state-controlled industries in an effort to spur growth. It is but one measure the Communist Party has taken to try to stimulate China’s sagging bottom. In fact, Beijing has in the past enacted the sort of stimulus Reich himself advocates for this country.
To bolster growth, China has been “fine-tuning” policies since autumn and accelerated the pace recently, cutting interest rates twice in June and early July, fast-tracking investment projects and encouraging energy-efficient consumer spending.
[Economist Zhiwei] Zhang said the recipe to bolster China’s slowing economy in the short run was still heavy state-backed infrastructure investment.