There have been a lot of posts regarding China’s coming crash. Tyler mentioned a few weeks ago that the financial crisis would become extremely severe if the China bubble simultaneously popped. Optimists note that China has much more room to maneuver than others. Notably, Beijing is sitting on top of a massive war-chest of USD ($1.9 trillion, forecast to reach $2.7 trillion by the end of next year). Pessimists point to extensive trash-loans, dubious evaluations of fiscal fundamentals, demographic problems, the environment…

The recently (here at least) introduced ‘cooling global economy’ meme has been cited as the prime reason for rapidly deepening rural land reforms. This can, they argue, increase domestic demand to prop up China’s economy even if exports decline dramatically. Maybe in five years? These are smart, clever Communists – not the idiots of my fantasies – so why are they focusing time and money on *rural* reform? My feeling is that there were a significant number of CCP members that opposed further rural reform (especially after removing *all* national agricultural taxes last year), but who have been sufficiently frightened by the prospect of declining exports. Though there’s no chance of this having any impact immediately, the crisis seems to have served as a wake-up call of sorts. So long as the slowdown isn’t too extreme (less than ~8.5%) or prolonged, this may be a very good thing. More to come once I sort out thoughts.