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7 Reasons Not to Fear China


China has just displaced Japan as the world’s second-largest economy and is likely to dethrone the U.S. as the number one sometime between 2020 and 2030. Years of double-digit GDP growth — we forecast 10% for 2010 — have put China on that path. But over the next few years, the gains will slow. That’s in part due to math, since the economy was growing from a small base, but a host of serious structural flaws also looms large. Fixing them will take major reforms that, so far, Beijing has proved unwilling to make — in no small part because they would require the Communist Party to loosen its grip.

Here are seven of the most entrenched problems we see taking some of the sizzle out of China’s lightning growth.
By Andrew C. Schneider

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