U.S. factories rebound, but Europe, China falter - 7 News (Australia) (originally from Reuters)

U.S. factories rebound, but Europe, China falter 

Speaking of future predictions....

It looks like some numbers came out today indicating that Chinese export demand is slowing down, though still growing. In addition, China is on track to post it's lowest growth rate in 23 years, according to the article.

So why is this important?

These numbers are starting to indicate to the world (and to China) that perhaps the armor is not without its cracks. It wouldn't be too crazy to guess that China knew about these numbers a few days ago, which inspired some of the action taken at the forum on economic reform.

This is by no means a harbinger of doom. Rather, numbers like these simply increase the volume of the little voice inside economists' heads that keeps trying to whisper, "But what if...?"

Ah yes, "if." The least beloved uncertainty in the English language.

So to make things interesting, my little blogger voice is asking "What would happen if China simply collapsed, right this second?"

To answer briefly, the effects would be completely devastating. The sheer amount of foreign investments that would be lost would be staggering, not to mention the disruption in the trade which is crucial to both the US and China's economy. I believe that at this point, we are so interconnected that anything faster than a slow motion decrease in activity from China could greatly threaten our economic recovery.

These numbers aren't necessarily worrying anyone yet, but they do point to the potential for stagnation.

What do you guys think? Is stagnation a legitimate problem that could hurt China? Or if you're feeling more creative, what would happen if China simply collapsed?

China’s economic reforms: What you need to know - CNBC

China’s economic reforms: What you need to know

The article outlines 5 of the major reforms made by China last week at their economic summit. The changes are being interpreted by analysts as being very substantial.

One of my previous posts said that China was facing many issues, which is still true. However, I think we should be worried by some of the reforms because of their likelihood of greatly enhancing China's economic position.

Basically the reforms are designed to gradually encourage increased private investment and economic activity. The reforms also fix problems with welfare and land owning while supposedly helping to modernize and liberalize the labor force.

When reading about the reforms, I can see how the plan would help China. We shouldn't forget that China is the second-largest economy and has the greatest number of people. Gradually transforming this population into a consumption-based society will generate great wealth for individuals as well as the government (which undoubtedly will continue taking percentages of profit from State-owned enterprises).

Another striking fact is the appearance of political unity. Because of their strict censoring, we would have no idea if different factions in China have different ideas or oppose certain aspects of the reforms. It is just such a marked difference from the globally-broadcast squabbles of the US government. I obviously don't want censorship, but I wish there was some magic way to keep our secrets and disagreements... secret.

Part of me fears the seemingly inevitable future in which China surpasses us as the greatest economy. Yet another part of me questions how long things can last for them. With so many people, and such tight control (no matter how gradually you loosen it), it begs the question if things will eventually burst, and if so, what the result of that will be.

What do you guys think? Is this tendency towards reform indicative of a future where China outpaces the US? Or do you think something is bound to go wrong? Post your thoughts below.