James R. Gorrie - The China crisis how Chinas economic collapse will lead to a global depression

Contents

Cover image: Duncan Walker/iStockphoto

Cover design: Michael J. Freeland

Copyright 2013 by James R. Gorrie. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Gorrie, James R.

The China crisis : how Chinas economic collapse will lead to a global depression / James R. Gorrie.

pages cm

Includes bibliographical references and index.

ISBN 978-1-118-47077-0 (cloth); ISBN 978-1-118-47080-0 (ePDF);

ISBN 978-1-118-47079-4 (Mobi); ISBN 978-1-118-47078-7 (ePub)

1. ChinaEconomic conditions2000- 2. ChinaEconomic policy2000

3. Global Financial Crisis, 2008-2009. I. Title.

HC427.95.G67 2013

330.951dc23

2012049233

I dedicate this book to my beautiful wife Lulu, who supported and encouraged me throughout the long writing process with a timely smile, loads of patience, and the occasional yet indispensable glass of wine. Her heartfelt faith in me is much appreciated.

I would also like to dedicate this book to my three boys, Brandon, Oliver, and Alexander, whose playful interruptions and numerous video game sessions gave me much-needed breaks along the way.

Finally, I would like to dedicate this book to my parents, Dr. Douglas and Marjorie Gorrie, for their love and encouragement throughout my life.

James R. Gorrie

Austin, Texas

November 30, 2012

Men in the game are blind to what men looking on see clearly.

Chinese proverb

Acknowledgments

When I decided to write The China Crisis , it was sort of an intellectual homecoming for me. As an economically challenged doctoral student at the University of California at Santa Barbara more than a few years ago, I had just passed my comprehensive exams and gathered my dissertation committee together when I lost my funding amidst budget cutbacks. My choice was either to go into debt another hundred grand while I wrote my dissertation on the political economy of China (and probably live out of my 1969 VW camper van, which was all I had at the time) or forage for a job in the real world outside the protective walls of academia. I chose the latter. It has been quite a winding path, to say the least.

Fast-forward 20 years, and I have finally written the book that I had wanted to write. Though now far removed from graduate school, I have never lost interest in the world at large, nor of watching China as it grew and transformed itself, year after year, into a formidable, fascinating and greatly distorted economic power. Needless to say, completing this book is a dream come true for me and a very personal accomplishment. In getting my thoughts out of my head and into print, there are a few people who truly made it happen for me and they deserve my sincere thanks and acknowledgment.

My heartfelt thanks and gratitude belong to my wife Louise, who always found a way to make much of the long road a bit smoother than otherwise would have been, and remained with me through the very rough spots. I could not have a better companion with whom to travel lifes winding, adventurous path.

I want to also thank MaryEllen Tribby, who not only is a fan of my writing, but was at one time also a colleague. Of course, I also want to thank the people at John Wiley & Sons: in particular, Deborah Englander, for her faith in me, for agreeing to go along with my idea for The China Crisis , and for giving me the opportunity to write for such an esteemed publisher. I could not have asked for a better home for my first nonfiction book. I would also like to express my personal appreciation to my editor, Judy Howarth, for all her help with the book, her flexibility, and her wise suggestions along the way.

Finally, I would like to thank my good friend, Al Hyam, for his insight and perspective, (though sometimes challenging my own, highly valued nonetheless) and for more than 20 years of great conversation and friendship through good times and some not-so-good times.

JRG

Introduction

When I discussed writing this book with my publishers, I mentioned that I wanted to make it as informative yet easy to read and digest as possible. I wanted the book to appeal to the business individual as well as academics and those with a causal interest in whats evolving in China. As a former academic, I am used to academic writing, but the vast majority of the publicincluding business people and those with a general interest in whats happening in the worldare not. That is not a dig against academia; its just a fact. Most people get their information from Internet sites and so I have attempted to keep the writing as informative and engagingly conversational as possible. Also, I will use statistics as reasonably and effectively as possible without turning the book into a chore to get through.

My main purpose in writing this book is to inform the reader just what is going on with Chinas economy, and to provide a more balanced and accurate picture of some of the enormous challenges that China faces, which seem to get overlooked in popular news reports. As noted above, I use statistics where needed or helpful, but at the same time, I am mindful of avoiding presenting a dry, quantitative recitation.