The Bear Case for China

China may not overtake America this century according to Ambrose Evans-Pritchard. Not surprisingly, its biggest obstacle is political (Telegraph):

China's ageing crisis is tracking Japan's tale with a 20-year delay. China can expect to see the same decline in "marginal productivity" that has afflicted every other facing a rise in the old-age dependency ratio.

The authorities can of course keep the game going if they wish with another burst of credit, but risks are rising and the potency of debt is wearing off. The extra output created by each yuan of lending has halved in four years. Mr Li knows the game is turning dangerous.

A 2010 book by People's Army Colonel Liu Mingfu - "China Dream: Great Power Thinking and Strategic Posture in the Post-American Era" - is still selling like hot cakes in China. Yet it already has a dated feel, a throwback to peak hubris. China has everything to play for. With skill and a blast of freedom, it can take its rightful place at the forefront of world affairs. But nothing is foreordained.