Paul Krugman on China's economic woes.
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I worry especially about that last point. China needs to replace unsustainable real estate investment with higher consumer demand. But some reporting suggests that top officials remain suspicious of “wasteful” consumer spending and also balk at the idea of “empowering individuals to make more decisions over how they spend their money.” And it’s not reassuring that Chinese officials are responding to the potential crisis by pushing banks to lend more, basically continuing along the path that got China where it is.
So China may have a crisis. If it does, how will it affect us?
The answer, as far as I can tell, is that America’s exposure to a potential China crisis is surprisingly small.
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