As we enter this new decade, it is worth taking a break and looking back on what took place in the past ten years. As this world grows smaller, in ten years China has been able to reshape the perception we now have of the economy as a whole. The shake-up is clearly visible in various sectors, and furthermore, the today’s geopolitical reality is following the same trend. Since China has outperformed Japan and lately Germany on many macro and microeconomics sectors, it’s now become clear that the next competitor in line as a country is the United States of America.

And as I tend to look at historical perspectives, it is worth knowing that in the 19th and 20th centuries Great Britain and Continental Europe already were the world’s largest economies. In 1776, when the US Declaration of Independence was signed it was unrealistic to say that the new republic might become the world’s leading military, political, economic and industrial power outperforming existing powers like the british empire and overshadowing others European countries. In like manner, given the truly global nature of the world’s economy and the speed at which everything changes today, it is worth underscoring the similarities of an inexisting capitalist economy in China 20 to 30 years ago and now, this staggering reality: In 2010, China is the world economy’s engine. It really is worth thinking the heretical. It maybe time to consider that China might reach the tipping point sooner than anyone can predict. No certainty or prediction here. Just some food for thought. But before jumping on the alarm bell, let’s assess what is really going on in China’s domestic economy today and what do many economists think about the situation on the ground. According to a recent article in the New York Times, there are credible economists and investors who think that, with property prices soaring in key cities, China has the next great real estate bubble waiting to be popped. Even the chinese authorities are worried, too. Citing ”excessively rising house prices” in urban areas, on sunday, the government said that it will monitor capital flows ”to stop overseas speculative funds from jeopardising China’s property market”. More importantly, it also said that any chinese family buying a second home must make a minimum 40% down payment.

While many economists say that they have read this storyline before, there are nonetheless some who say that there are good reasons to be optimistic about China. Rapid economic growth, rising family incomes, continued migration of a young population to the cities, sustained demand for housing, and a banking system less exposed to the mortgage  market than banks in the US or Japan. Those are arguments for an optimistic perspective on China, according to economists who say that chinese banks are less vulnerable from a real estate meltdown for many years.

We want to hear from you. Tell us what you think about the china economy in this new decade

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