What Gives With China's Economy?

This has been running around the blogs for the past twelve hours or so and I didn't pay much attention to it or think it through. China's Finance Minister, Xie Xuren, had more or less landed in Peru when his country called him home to fix problems at home. Bloomberg's piece on it suggests he might not make it to Bush's faux Bretton Woods conference on the 15Th.

So what's the big deal? Evidently, the banks in China are resisting government pressure to lend to small businesses (sound familiar?) and bankruptcies are mushrooming. According to Bloomberg, the toy industry is tanking which doesn't say much for the future prospects for that sector given the time of year.

What to make of all of this. Just a wild guess, but I suspect the Chinese are discovering that there was nothing more to their economy than a lot of over spending Americans. Take them out of the mix and the quicksand that economy is built on becomes evident.

This isn't just a problem for China, however. If they start fading, one of our major financiers is lost and at the rate things are going it might get pretty dicey financing America's trillion dollar deficits. And to toss a little salt into the stew here, history indicates that totalitarian regimes can get particularly nasty when squeezed badly by economic circumstances.

Tom Lindmark