China’s economy might indeed crash. Then again, it might not. Bearishness on China has gone viral. Two years ago, talk was of China’s economy saving the world. Today observers have swung to the opposite extreme, one expressed elegantly by Paul Krugman as “the Chinese model is about to hit its Great Wall, and the only question now is just how bad the crash will be.”
The following essay was written for the Boao Review by Professor Danny Quah of the LSE where he carefully dissects current predictions that the Chinese economy will either dramatically crash or else become ensnared in the ‘middle income trap’, please click here to open the full PDF.