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My mantra has been quite simple: No country is immune to the global crisis, especially those that depend heavily on exports. But before we move on, the calls for China to overtake the U.S. as the largest economy keep on coming, and the forecasts range anywhere from yesterday to sometime in the future. According to MarketWatch, Deutsche Bank pins the milestone around 2020, while The Telegraph reported that "Jim O'Neill, the head of Goldman Sachs Asset Management, has predicted that China could overtake the United States as the world's largest economy by 2027."

"Since 2001, China's GDP has risen fourfold, from $1.5 trillion to $6 trillion [£949bn to £3.7trillion] Economically speaking, China has created three new Chinas in the past decade. And it's likely that the combined GDP of the four BRIC nations will exceed that of the U.S. sometime before 2020."

Of course, what Mr. O'Neil left out was that China's growth occurred on the back of the West, with cheap labor as the main fixture. As a reminder, Russia's economy grew sixfold during the same period - a much higher growth rate - and still has plenty of issues, as documented by Channel4.com's Unreported World (video).

Unreported World reveals the huge personality cult around Vladimir Putin as it follows the extraordinary actions of the mass youth movement dedicated to protecting the interests of the Prime Minister and Russia.

Also, and to add perspective to the claim, the four BRIC nations as a group - Brazil, Russia, India, and China - have 41% of the world's population, and if their GDPs combined do exceed that of the U.S. in 9 years, a country with only 4.5% of the world's population, it will be a far cry from a big accomplishment. For the record, the IMF projection for the Chinese economic ascension to the number one spot is 2016, as reported by The Guardian in April of 2011.

But one must read between the lines, and the emphasis is not on the projection that China's economy will continue to grow, but rather that it will become larger than the U.S. The screaming obsession with finding a country, any country, to topple the U.S. from its economic perch is mind-boggling, adding nothing to the economic discussion.

Having said that, and considering that everyone is entitled to their opinions, I respectfully submit that I shall take the other side of Mr. O'Neil's trade without a second thought. Furthermore, I forecast that by 2020 the Chinese Communist party will not be in power, and will be a replay of the U.S.S.R in 1991.

On the economic front, recent data suggests that the housing industry in China is reversing course, according to Bloomberg, although the official data is still benign by Western measures.

China's home prices fell in 33 of 70 cities monitored by the government in October, the worst performance since it expanded property curbs and scrapped the reporting of national average housing data this year.

But "home sales plunged 25 percent in October from the previous month," and the official warnings are already being dispensed, as reported by Bloomberg.

China's banking regulator warned lenders that some projects backed by local governments may run out of funds, and loans to property developers are likely to sour as sales slow, a person with knowledge of the matter said.

But not all is lost, according to some while ignoring the world around us, and exports will continue to feed the Chinese economic machine. Well, here's an interesting report from Reuters, quoting Xia Bin, head of the financial research institute at cabinet think tank Development Research Center, that sits on the 15-member monetary policy committee of the central bank.

China's trade balance faces the risk of sliding into a deficit for the first time in two decades in 2012 as export demand in Europe and the United States slumps, an academic adviser to the central bank said on Tuesday.

So what's one to do? Stimulate the invincible economy by any means, and at any cost, as reported by Reuters:

Chinese Vice-Premier Wang Qishan warned on Monday the global economy is in a grim state and the visiting U.S. commerce secretary said China would spend $1.7 trillion on strategic sectors as Beijing seeks to bolster waning growth.

If the last stimulus was abnormal, then this one is about 2.5 times larger. The strategic sectors include "alternative energy, biotechnology and advanced equipment manufacturing," and as the common person knows well, government led projects always leave a lot to be desired. But the size of the stimulus speaks volumes about something else: Political desperation.

Political? Yes, because even China's two closest allies - North Korea and Cuba - are adjusting to the times, as if they were told to fend for themselves. The Cuban government started to allow private property rights, and although it's still a work in progress, citizens will be allowed to buy and sell houses, as reported by Reuters. I know it sounds strange, but that's the way it is. North Korea, a super secretive regime, is now allowing expansion of cell phone use, which was a crime only fours years ago, according to Reuters.

Yes, I do read the arguments about 8% growth, foreign exchange reserves, and all that jazz, but in an economy that is dependent on exports and credit, the debt always come back to bite one in the rear even with positive growth, because the positive number may be meaningless if the cash flow is not enough to service the debt. Unfortunately, the U.S. and Europe understand the dilemma.

Furthermore, the effectiveness of the previous spending has already been, and continues to be, questioned, as I chronicled in a recent article, "China's Economic Cracks Are Getting Bigger":

Considerable stretches of expressways completed in central and western regions are usually empty, simply basking in the sun. Thus, expressway construction has suffered from excessive expansion. It's gotten out of control.

Lastly, domestic demand is often mentioned as the Chinese cure for its economic slowdown, but China has to make one choice, and the options are mutually exclusive: Higher wages and healthier domestic consumption, or cheap labor to keep the economic dream alive. In simple terms, the first option leads to an economic contraction, and the second leads to unhappy citizens and cuts into the out of control real estate market, or an economic contraction. Please let me know if there's something amiss within the realm of common sense.

To close, I reference Caixin's article "Bank Report Warns of Bad Loans in 2012," with the bank being China International Capital Corp.:

Meanwhile, banks have lately seen more and more loans go bad, as SMEs face operational difficulties, local government debt matures, and property developers perform sluggishly.

Why do economic forecasts often fail? Because there's a blind focus on pristine numbers and charts, and a disconnect with the human condition.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: China Will Prime Economic Pump, Again