Is China the Next Lehman Brothers?

Martin (Two Brains) Wolf, the Financial Times’ venerable economics commentator, doesn’t always have the correct answers. But he invariably poses the right questions, which, in a journalist, is often more important. In his column this week, Wolf asks, “Is China different? Or must its borrowing binge, like most others, end in tears?”

That the Middle Kingdom’s transformation from a Communist command economy is a great success story cannot be doubted; it’s one of the wonders of modern history. Since 1991, according to the World Bank’s database, its inflation-adjusted growth rate has averaged about ten per cent a year. Rapid growth has dragged hundreds of millions of people out of grinding poverty and turned China, according to some measures, into the world’s second largest economy. (In terms of G.D.P. per capita, the performance is a bit less impressive. In 2012, according to the World Bank, China’s was $6,091, placing it among places like Peru, Serbia, and Thailand.)

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