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A Chinese puzzle

For years, the Chinese economy has grown at one of the highest rates of any country in the world. Even during the recent global downturn, China continued to grow rapidly, even though at a slower rate than before.

To be sure, there were problems as there always are: some of the massive infrastructure investments were ill-conceived and/or badly executed; income and regional disparities increased; many local governments rode roughshod over their inhabitants, often sparking violent protests; too much investment went into traditional industry and not enough into hi-tech; much of the growth was based on stolen or extorted technology; massive corruption; an artificial exchange-rate peg favored exports and discouraged imports unfairly; there was a property and a construction bubble, and others. Much of this commentary was exaggerated and has recently diminished. In the meantime, a peaceful transition of power took place in Beijing from one generation of party and state leaders to another, all in the same mode to be sure – significant political reform is very unlikely. China is flexing its foreign policy and military muscle in ways not seen before, and its armed forces are being enhanced at a rapid rate. 

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