Chapter 1: At the crossroads of long-term development
It was the spring of hope, it was the winter of despair. (Charles Dickens) For many years, economists, scholars across broadly diverse academic fields, and amateur observers have made various predictions on the Chinese economy, either praising or criticizing, which frequently draw the attention of the Chinese government and are the source of hot debates in the media and academia. Though some of these predictions are not based on rigorous, scientific analysis, they all serve as a wake-up call to warn of problems which pose challenges to Chinese economic growth and to suggest solutions. This book, however, only cites predictions based on methodologically sound studies, while ignoring those “crying wolf” stories that are popular but not backed by sufficient evidence or economic rationale. Furthermore, predictions and forecasts on the macroeconomic cycles of China are not included within the scope of this discussion, because in the short run the macroeconomy fluctuates as external shocks come and go, the government changes direction on macroeconomic policy, and people alter their expectations. By reviewing existing predictions on the Chinese economy and other economies’ slowdowns that are relevant to China, this chapter asserts that the Chinese economy is standing at a crossroad that divides its future prospects.