Walden Bello - Paper Dragons: China and the Next Crash

A stark warning about the vulnerable state of global financial markets from one of our most acute and prescient thinkers.

Naomi Klein, author of This Changes Everything and The Shock Doctrine

Startling, revelatory, brilliant! An astonishing expos of the frightening economic details of this moment.

Jerry Mander, author of The Capitalism Papers

Walden Bello, in this terrifying new book, explains that, if major changes are not taken, the same set of circumstances unregulated shadow banking, runaway financial speculation and an overheated real estate bubble are poised to take down Chinas economy, and perhaps the worlds with it. A very important book for this political moment.

Maude Barlow, author of Blue Future and chairperson of the Council of Canadians

A tour de force of past and future financial crises by the globes most astute progressive political economist. Bello puts forward a comprehensive agenda to prevent the next crisis.

Robin Broad, Guggenheim Fellow and Professor, American University

Walden Bello brilliantly explains how our global financial system still operates as a giant casino with China now one of the most reckless gamblers. Read this book to learn how we can tame the global financial casino before China and other reckless gamblers cause the next crash.

Sarah Anderson, Global Economy Project Director

Crisply and clearly written, Paper Dragons demonstrates that: Yes, it can happen here, again and again. Politicians and lawmakers everywhere had better get a grip on finance, now. Or watch out, World!

Susan George, President of the Transnational Institute and author of How the Other Half Dies

Walden Bello suggests that, while the next devastating crisis with global ramifications can strike any one of capitalisms many nodes, the immediate threat comes from Asian giant, China. The lesson? Reform of capitalism may be the immediate call, but in the final analysis we must transform how the system works and we live our lives.

C. P. Chandrasekhar, Professor of Economics, Jawaharlal Nehru University

Walden Bello shows how global capitalism remains structurally prone to financial crises. With clarity and conviction, Bello continues to explain reality lucidly and inspire progressive alternatives.

Jayati Ghosh, Professor of Economics, Jawaharlal Nehru University

The question may not be if another crash will take place, but when and where it will start. Bello eschews pessimist fatalism, arguing for a broad programme of financial reforms integrated into a comprehensive programme of reforms of the real economy. Inspired and accessible Wholeheartedly recommended!

Heikki Patomki, Professor of World Politics,

University of Helsinki, author of The Great Eurozone Crisis

In 2008, a U.S. housing bubble careened out of control and plunged the world into a gruesome global financial crisis. Bello brilliantly lays out the case that unless we put effective checks in place the next financial crisis will likely erupt in China.

John Cavanagh, Director, Institute for Policy Studies

In this volume, Walden Bello demonstrates that East and Southeast Asia has been the location of multiple financial crises, despite enjoying an international reputation as a group of successful globalizers.

Manuel Montes, Senior Analyst, South Center, Geneva

Walden Bello is one of the rare truly global thinkers. A must-read for those seeking prevent the next financial meltdown. Superb.

Cornelia Woll, Professor of Political Science; author of The Power of Inaction: Bank Bailouts in Comparison

Walden Bello is one of the foremost analysts of global economics and politics of our time. He shows that the global economy is a ticking time bomb. Erudite and eloquent, this book could not be timelier. This is a must read.

William I. Robinson, Professor of Sociology, University of California

Walden Bello argues that fragility remains within the system and points to China as the potential source of the worlds next major economic crisis. He raises issues that citizens, policymakers, and financial players ignore at their peril.

Dean Baker, Co-founder and Senior Economist, Center for Economic Policy Research

ABOUT THE AUTHOR

Walden Bello is currently the International Adjunct Professor of Sociology at the State University of New York, Binghamton and an associate of the Transnational Institute in Amsterdam. He was formerly a member of the House of Representatives of the Philippines, and has previously held positions at the University of the Philippines, University of California at Berkeley, and University of California at Los Angeles. His previous books include Dilemmas of Domination: The Unmaking of the American Empire (Zed, 2005) and Capitalisms Last Stand? Deglobalisation in the Age of Austerity (Zed, 2013). A noted critic of globalization, he is a recipient of the Right Livelihood Award (also known as the Alternative Nobel Prize).

Paper Dragons: China and the Next Crash was first published in 2019 by Zed Books Ltd, The Foundry, 17 Oval Way, London SE11 5RR, UK

www.zedbooks.net

Copyright Walden Bello 2019

The right of Walden Bello to be identified as the author of this work have been asserted by him in accordance with the Copyright, Designs and Patents Act, 1988

Typeset in Minion by seagulls.net
Index: Rohan Bolton
Cover design: James Jones

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying or otherwise, without the prior permission of Zed Books Ltd.

A catalogue record for this book is available from the British Library

ISBN 978-1-78699-596-4 hb
ISBN 978-1-78699-598-8 pdf
ISBN 978-1-78699-599-5 epub
ISBN 978-1-78699-600-8 mobi

To Suranuch (Ko) Thongsila (19632018)
With deep gratitude, love, and loyalty

CONTENTS

A number of colleagues contributed to the effort to get this book out. I am very grateful, in particular, to Nick Buxton, Fiona Dove, Pietje Vervest, and Satoko Kishimoto of the Transnational Institute (TNI). TNI commissioned this study and its staff provided valuable advice along the way.

Part of the study was written while I was a senior research scholar at the Center for Southeast Asian Studies in Kyoto, Japan, in 2016 and 2017. For providing a research home as well as resources, I would like to extend my heartfelt thanks to the research and administrative staff of the Center, and in particular to Caroline Hau.

Sections of the study were completed while I was teaching in 2017 and early 2018 at the sociology department of the State University of New York at Binghamton, which also served as a research base for me. Michael West, Joshua Price, Denise Spadine and Linda Zanrucha were unstinting in their encouragement and assistance, and for this I am very grateful.

I would like to thank Henry Holt Co. for permission to use passages from my earlier book Dilemmas of Domination: The Unmaking of the American Empire.

Kim Walker, my editor at Zed Books, was, as usual, very helpful and generous in providing advice and guidance.

My beloved wife, Suranuch Thongsila, provided valuable intellectual and emotional assistance throughout the whole project. She passed away, however, a few months before it was completed. The last chapters of this book were written beneath the heavy weight of her loss, but her inspiration saw me through. To this wonderful, loving companion, I dedicate this book.