Is China’s Bubble Bursting?

This WSJ article suggests that it is: http://online.wsj.com/article/SB10001424052970204505304577001180665360306.html?mod=WSJ_hp_LEFTTopStories#project%3DSLIDESHOW08%26s%3DSB10001424052970203716204577017811017851128%26articleTabs%3Darticle

Wenzhou is where Deng Xiaoping went in the late 1970’s to launch China’s economic modernization.  Today, the massive, informal networks of angel financing that powered Wenzhou explosive, thirty-year long expansion are rolling up, leaving empty factories, empty apartment complexes, unemployed workers, and personal carnage.  It didn’t take much of an export contraction to roll up Wenzou’s economy, and it may be just beginning if, as expected, the Eurozone tips into recession.

If Wenzhou’s troubles spread to the rest of eastern China’s industrial belt,  a lot of its manufacturing workers headed back to their villages emptyhanded.   China’s people have had a taste of our prosperity and a foretaste of our freedom.  They’re hooked, and when prosperity ebbs, it won’t be pretty.

The historian Crane Brinton argued that revolutions are not caused by poverty or  deprivation, but rather by the confounding of rising expectations- the dashing of hopes.  Nowhere in China were hopes higher for longer than in Wenzhou. China’s rulers might have their hands full, and the temptation to distract the angry masses with some bogus foreign incident will rise sharply. 

Keep a close eye on China!