The Chinese government seems to be out of control as its trying quite desperately to hold the economy. And frankly, it was expected. The administration pumped in a considerable amount as a stimulus package, which comprised 14% of the recently reported GDP. The base of the economy was already quite wavering, and if you dump in so much in relatively short term, you witness bubbles, in fact, superbubbles.

However, it isn’t only the recent actions that’s disturbing Chinese economy. We will have to turn back and explore the last decade to known the factual reasons. To boost the economy, the Chinese government, around a decade ago, kept the value of its currency extremely low. Hence, the cheap goods produced by China seemed to be even cheaper in the international market. They targeted growth, at any cost.

Finding the goods quite inexpensive, the demand for Chinese products in the US market grew incredibly. Hence, China became a major exporter, especially for the US market. If it would have been a free-market, the currency value of China would have been greater than dollar (which would have depreciated). However, if the Chinese government would have allowed this, they wouldn’t have reached this current mark of 10% economic growth each year.

They wanted to grow at any cost and they weren’t a part of the US. Hence, thorough a systematic management of domestic and international banking system, more than trillion dollars was accumulated by Chinese government, in dollars and euros. However, this resulted in an involuntary effect: It helped America to maintain the low interest rates. Moreover, this reserve helped the US to get finance when the major portion of its population was indulged in splurging (as it’s the biggest market of Chinese products).

The US kept consuming Chinese goods, and China kept accumulating dollars, which helped them to buy more of US treasuries. This kept the interest rates low. However, with increasing number of dollars being provided to China, the US population was pleased using economical Chinese products.

So, both the countries traded well and the relationship flourished for some time. However, every good relationship and all good things come to an end, end with a batter. Soon, the sum-prime crises started bothering the US government and we witnessed the meltdown of our economic condition. American banks, along with many national and international giants, sunk in the sand and we all know how this took shape.

Now, let’s jump ahead and talk about the present condition. We can see a gradual recovery in the global economy. The US, too, is improving every quarter. However, the unemployment rate is still lofted, banks are concealing themselves in the conservative shell again, and there isn’t much demand for the loans.

Meanwhile, the grasses grown by Chinese government looks quite green. The economy grew by 8.7% in 2009, which was quite a surprise to the rest of the economies. And it seems like China has derived a miraculous way to boost its growth. But the grass that’s glittering green is actually pale. Firstly, they are lying. It’s not mandatory to believe the figures explained by China as growth. In fact, it’s foolishness to believe it when we know that its overall exports plunged by 25%. The electricity consumed by China was extremely lower than the previous.

So, in the midst of global economic crises, with considerably low exports, with massive plunge in usage of electricity, how can any government produce goods much more than last year, and account 8% growth? Explain this, if anyone can.

This government can literally do anything to show rosy figures. Hence, secondly, they are constantly looking for alternative source to boost GDP, even if it means internal damage. Many farmers in small cities migrated to developed cities to seek high-paying jobs during the boom period. However, during the crises they neither received any job nor did they grew crops. And because the Chinese government lacks safety of people like in developed countries, no benefits are provided to the unemployed. They aren’t just jobless, they are starving. And have you every seen hungry people complaining. No, they don’t grumble, they start riots. Who cares? The government saves huge amount of funds.

Pumping huge amount of money in the financial structure of country is possible, but not for every country. However, even the countries that pump huge amount cannot compel the financial institutions to lend, nor they can compel the consumers to fritter away their income. However, for China, it isn’t difficult to achieve this. Most of the financial institutions are owned and fed by the government. Hence, it’s not much difficult for China to make the banks lend. Again, over one-third of the economy comprises of government-owned enterprises. So, the government can make them scrounge and spend.

The law here helps the government to grow enormously because the rules are yet quite nascent. Spending on infrastructure is just an effortless action. If the government, for instance, wants to build a hospital, the people around will be vacated in a day, irrespective of their willingness or anguish.

Nevertheless, it’s always useful to have a good infrastructure system. Railroads, highways, educational system, etc have many long-standing benefits. However, it could have done better if the government would have been a bit more responsible and capable. Corruption and faulty decisions are two major reasons hindering the real growth.

If you really want to achieve 100% employment, you need to generate jobs through real estate and infrastructure because that’s where the real unemployed (unskilled labor) are used. However, they know this fact, and that is how they kept the unemployment rate low till now. They built skyscrapers, and they are still building it, without bothering much about the ones that are still unoccupied. So, how do they plan to stop the impending unemployment rate?

And how will they recover from the growth obesity. Though they have been constantly and enormously growing since past decade, the quality of growth is depreciating increasingly. You don’t believe it? Remember the South China Mall? It was the biggest mall on earth. However, till today, it’s 98% unoccupied. They generated employment, they generated growth, but was it useful? They later built Ordos, a city in Inner Mongolia because they expected more than a million residents to occupy the space. But where are those million residents?

Let alone infrastructure, the industrial growth is also a result of excessiveness. The inactive, excessive production of iron in China is more than the combined production capacity of South Korea and Japan. Idle cement produced is more than combined consumption of India, US, and Japan. I could list down the excessiveness of almost every industrial produces, but I guess you got the point. In simple terms, China is less glitzy but a massive version of Dubai.

The huge population, their accomplishments, their economic growth, their stability, and the ability are worth praising. However, as we are now much aware that every bubble is just a good condition stretched far ahead than necessary. And what happens when a bubble is inflated (since a decade in this case) too much? It bursts, sooner or later. The shortcut taken to represent current growth will definitely ruin China’s future.

It may have achieved success by bending few laws, but the laws of global economy works quite differently. This momentary hallucination will lead to real pain with ever-lasting scars. There aren’t any shortcuts and this rule abides to every individual, every city, every country, and every world.