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The China Crisis: How China's Economic Collapse Will Lead to a Global Depression

ISBN: 978-1-118-47077-0
304 pages
May 2013
The China Crisis: How China


A controversial look at the impending Chinese economic collapse—the history behind it, its contemporary causes, and its dire implications for the global economy

All the experts agree: the 21st century belongs to China. Given America's looming insolvency and the possibility of the collapse of the U.S. dollar, who can doubt that China is poised to take over the role of economic superpower? Written by political economist and leading financial journalist James Gorrie, this book offers a highly controversial, contrarian view of contemporary China. Drawing upon a wealth of historical and up-to-the-minute data, Gorrie makes a strong case that China, itself, is on the verge of an economic crisis of epic proportions. He explains how, caught in a recurrent boom/bust cycle that has played itself out several times over the past sixty years, China is again approaching total economic and social collapse. But with one important difference this time: they may very well take the entire global economy down with them.

  • Explores the Chinese communist party's unfortunate history of making costly and very bloody mistakes on an enormous scale
  • One-by-one Gorrie analyzes those critical mistakes and explains how they may lead to economic collapse in China and global depression
  • Describes Chinese "cannibal capitalism," and where its massive abuse of the country's environment, people, and arable lands is leading that country and the world economy
  • Chronicles China's history of recurring economic crisis and explains why all the evidence suggests that history is about to repeat itself
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Table of Contents

Acknowledgments xi

Introduction 1

Chapter 1 A World on Edge 17

What Is the Proper Context in Which to Assess China Today? 18

China’s Self-Inflicted Crises 23

Great Leap Forward or Famine? 24

Cultural Revolution or Social Cannibalism? 26

How Has Economic Integration with the Global Economy Changed China? 30

Is China Becoming the Next Superpower? 31

Trading Partner to the World 32

The World’s Manufacturer 33

An Appetite for Commodities 34

Why Does China Have “Gold Fever?” 35

What Does the Rise of Other Nations, but Especially of China, Mean for the Current Financial System? 37

Marketing the China Brand 38

Does China Have a Bright and Powerful Future? 40

What’s Really behind the Great Wall? 41

Notes 44

Chapter 2 Stability and Legitimacy: A Chinese Crisis from Within 47

What Kinds of Risks and Problems Are Typical of Unstable Nations? 48

Stability and Instability: What Are They? 49

The Source of China’s “Stability” 51

What Are the Characteristics and Effects of Instability? 52

Does Stability also Mean “Legitimacy” in China? 54

Is Legitimacy of the Government Necessary for Stability? 55

Does Communist China Have a History of Stability? 56

Does China’s Beijing Model Lead to Stability and Legitimacy? 58

Notes 59

Chapter 3 The Rising Tide of Instability 61

Has China Been Influenced by Western Ideas? 64

Sources of Rising Instability in China 66

Notes 96

Chapter 4 Is China’s Economy Sustainable? 99

The Beijing Model: The Path Forward or Cannibal Capitalism? 100

What Is the Beijing Model? 104

Is the Beijing Model Self-Sustaining? 105

Notes 141

Chapter 5: China’s Quiet Crisis: Financial and Economic Meltdown 145

A Perception of Strength 146

China’s Quality of GDP 148

A Public and Private Stimulus Time Bomb 152

Development versus Economic Growth 155

How Much Was the Money Supply Expanded in China? 156

Bursting Bubbles 157

How Underperforming Are the Assets and the Loans Underlying Them? 159

China’s Banks Looking for the Real Thing 161

Currency Manipulation and the Domestic Economy 164

Will the Yuan Devaluation Be Enough to Keep the Economy Going? 165

Inflation and Deflation Dangers 168

Food for Riots 169

Financial Endgame 172

Notes 174

Chapter 6 China’s Extreme Environmental Degradation 177

Raging Environmental Crises 178

A History of Huge Mistakes 178

Hiding the Truth 183

Command Economies, Dehumanized Society, and Pollution 184

Pollution, Development, and Democracy 188

China’s Lose-Lose-Lose Proposition 190

China’s Air Pollution—Gasping For a Breath of Fresh Air 192

Bitter Water: China’s Lakes, Rivers, and Streams of Poison 194

How Bad Is the Water Pollution Situation in China? 195

Cancer Villages and Insanity 196

Why Has China’s Water Pollution Gotten So Bad? 197

Lifeless Oceans 198

A Plague Upon the Land 199

China’s Dead Zones 200

The Land of Arsenic 201

Why Is Such Pollution Tolerated? 202

CCP Land Policies Promote Abuse 203

Losing the Breadbasket 204

The Deforestation and Desertification of China 207

What Is the Real Cause of Desertification? 210

Ghosts of Famines Past 211

Notes 214

Chapter 7 Political Transition and the Breaking Point 223

Will Xi Jinping Unify the CCP? 227

Liberalization versus Stability 231

Passing the Torch: China’s New Nationalism 232

Domestic Crises for the New Leadership 237

How Will the New Chinese Leadership

Navigate the Rough Waters Ahead? 240

Hell and High Water 244

Notes 244

Chapter 8 Empire Decline and Complexity Theory 247

China as an Empire 248

Hong Kong 256

Taiwan 257

China’s Uighur Problem in Xinjiang 258

The Sandals and Saff ron Threat of Tibet 260

Fear and Greed in the New Leadership 262

Complexity Theory 263

Notes 270

Chapter 9 The Fall of the Red Dragon 273

China’s War with China 275

The Breakup 279

Conclusion 283

Notes 284

About the Author 285

Index 287

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Author Information

JAMES R. GORRIE writes on macroeconomic topics, investment strategies, and geopolitical events around the world. He has interviewed experts such as renowned economist James K. Galbraith, currency expert Craig R. Smith, and real estate master George Ross of the Trump Organization. His articles have appeared or been referenced on sites such as MSN Money, Seeking Alpha, and Yahoo! Business News. He has served as Editorial Director and Managing Editor for digital publishing firms and is also an award-winning screenwriter, filmmaker (The Indian), and novelist. James also ghostwrites for both famous and semi-famous personalities in America and abroad. Before writing professionally, James spent over eighteen years in the financial industry. He attended the University of California at Santa Barbara where he reached doctoral candidacy in international relations and comparative politics, with an area specialty in international political economy; he also holds a bachelor's degree in economics. James lives in Austin, Texas, with his family and is busy writing for clients, his next novel, a couple of screenplays and another book.

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“An inside look at China’s future. James R. Gorrie reveals a China that the mainstream press has failed to investigate. His conclusions, based in fact and historical reality, may change your thinking about this potential superpower, which may have overplayed its hand. A must-read in a world of global currency wars.”—Craig R. Smith, founder and Chairman of Swiss America Trading Corp., author, commentator, and monetary expert

“Anyone who isn't aware of the impact China is going to have on the world over the next few years has their head stuck in the sand.  From their focused attack on the US dollar to the many bubbles they've created with their unsustainable economic policies, these will cause enormous impacts upon that country with reverberations that will be felt around the world.  James R. Gorrie does a fantastic job of laying out the real story of China for all of the world to see.”—John F. Carter, Founder of TradeTheMarkets.com, frequent commentator on CNBC and Bloomberg and regular contributor to SFO magazine and MSN Money

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Press Release

July 09, 2015
The China Crisis: How China's Economic Collapse Will Lead to a Global Depression

All the experts agree: the United States and EU are in rapid decline, and China is on the verge of replacing the United States as the world's dominant superpower. It's easy to see why that has become the consensus opinion when you consider China's average 10% annual growth in GDP over the past decade; its position as the dominant consumer of raw commodities and number-one exporter of manufactured goods; and the trillions of dollars that nation holds in reserve currency and its role as primary lender to debt-ridden Western economies.

So, are the experts right . . . will the 21st century belong to China? Or is there a darker reality than that suggested by the picture of rosy good economic health successfully sold around the world by the Chinese government's marketing apparatus?

In a book that is sure to ignite controversy among the punditocracy, in academe and at the highest levels of government, political economist and leading financial journalist James R. Gorrie, makes a compelling case that a closer, more nuanced look at the facts reveals a starkly different truth about the modern Chinese colossus: namely, that it stands upon feet of clay which, even now, are crumbling beneath it.

Rather than a nation on the cusp of replacing the United States as the global superpower, Gorrie avers, China is, once again, on the path to a complete economic and social meltdown. What makes this time different though, is that, unlike past China crises, this one is likely to have a devastating impact on the entire global economy.

Drawing upon a wealth of historical, demographic, statistical, and economic data, Gorrie develops a framework for understanding what's going on inside China now, as well as that country's future prospects, based on the seven key factors:

Stability: Is China's economic development stable, and is China's political system capable of responding constructively to instability?

Sustainability: Are China's political and economic systems sustainable, or is the Beijing Model based entirely upon external markets and false demand driven by unsustainable debt?

Dynamism: Is there a healthy dynamic between Chinese society, the means of production, and the political system, or is Chinese state capitalism a form of "cannibal capitalism"?

Justice: Are massive land seizures, a caste system, forced relocations, and slave wages rapidly undermining the regime's legitimacy?

Political adaptation: Does Chinese political culture help businesses adapt to financial challenges, or does it become increasingly oppressive as wealth increases?

Creativity: Do China's economic system and political culture encourage innovation, or do they rely on theft and other forms of technology transfer, while driving its innovators out of the country?

Renewability: Is the Beijing Model one that fosters renewability, or does it rashly sacrifice long-term stability and resource protection for short-term gains?

A meticulously researched and well-reasoned analysis of the state of China's political economy and the tragic, all-too-predictable missteps that will inexorably lead to that nation's collapse, The China Crisis is must-reading for policymakers, business leaders, and every intelligent reader with an interest in world affairs.

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