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Opinion
Tyler Cowen

China Can Resist a Crash But Can't Prevent One

The government's brawn lets it overpower economic weaknesses -- for a while.
Distortions.

Distortions.

Photographer: Qilai Shen/Bloomberg

After many years of 7- to 10-percent growth, economies tend to overheat, creating bubbles that burst. That’s what happened to South Korea and Japan in the 1980s and 1990s. But China’s economy keeps plugging along (though probably not at its published growth rate of 6.7 percent), defying the predictions of doomsaying pundits. Some indicators show a recovery this year.

That doesn’t mean that the danger of a crash has passed, however. There is growing evidence of a real-estate bubble, and the economy seems increasingly dependent on government stimulus and private-sector credit growth.