Arguably, the worst thing that could happen to China this time around is a growth recession similar to Japan’s in the 1990s. No Zimbabwe. No Argentina. No Weimar. No Iceland. No United States. The average Chinese citizen not only has little debt but actually saves more than half of his annual income. Student loans, auto loans, and credit-card loans are as plentiful as purple pandas.
China as a whole will be able to adapt to market conditions and prosper because sick companies will have been expelled from the marketplace and capital will be reallocated to the most efficient participants. Conversely, because the West has given up on bankruptcy and the freedom to fail, they will continue to flounder as they prop up poorly managed firms. FULL ARTICLE