China Watch

clipped from www.american.com Added to these domestic reverberations would be a dramatic slowing of the global economy, should China's economic growth derail. Beijing would almost certainly limit if not stop its purchase of U.S. debt, driving interest rates in America sky high, while consumers might be hammered by cheap export goods drying up due to the financial distress of Chinese manufacturers; already tens of thousands of factories have closed due to the current economic crisis, disproportionately affecting lower-wage earners in China. Banks in China undoubtedly have bad loans, shielded by non-transparent accounting practices, and as wealthy individuals and producers over-leverage themselves, the pieces are in place for a very bumpy road ahead. There's no way to predict if or when China's system becomes a house of cards, but if the world's auction houses continue to crow over massive Chinese purchases, then being a contrarian may be the smartest move of all.